Inflation came in lower than markets expected in Mexico, declining in annual terms and reinforcing prospects of deceleration in the months ahead. Today the focus will be on Mexico again, where we expect to see moderate growth in the Global Index of Economic Activity (1.8% YoY) at the beginning of the second quarter.


Mexico – Inflation surprised to the downside


June’s biweekly inflation fell -0.05% fortnightly, below market expectations (0.08% FoF) and dropping in annual terms from 4.6% YoY in May to 4.2% YoY. This was the result of an unexpected fall in livestock prices and lower than expected fruit and vegetable prices. Core inflation remains well below 3%, and non-core inflation is decreasing more consistently, as a result we expect inflation to fall below 4% before September.



What to watch today


Brazil – Credit report (May, 09:30 hrs NYT)


We expect the report to continue to show credit markets moving sideways, with public credit outpacing private credit, and lending rates moving up, in line with higher SELIC rates.


Mexico – Global Index of Economic Activity (April, 10:00 hrs NYT)


Economic activity is expected to grow moderately (1.8% YoY) in April given the contraction in industrial production (-2.1% YoY) and the moderate expansion in services (1.9% YoY) and retail sales.