Mexico’s Full-Year 2021 Inflation Highest Since 2000

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by Anthony Harrup

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MEXICO CITY – Inflation in Mexico ended last year at its highest level in more than two decades as rising food and energy prices, supply issues and changing consumer habits pushed up the cost of most goods and services amid the coronavirus pandemic Gave.

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The National Statistical Institute reported on Friday that the Consumer Price Index rose 0.36% in December and was up 7.36% throughout 2021, the highest for a calendar year since 2000.

Core CPI, which does not include agricultural products and energy, rose 0.8% in December and was up 5.94% from a year ago, at a more than 20-year high.

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Inflation and increased inflation expectations have prompted the Bank of Mexico to raise interest rates in its last five meetings, including a half-point increase in December to the overnight interest rate target of 5.5%.

The central bank has attributed the high inflation to several external and domestic factors. They include rising energy costs as economic activity lifts from the 2020 recession; supply-chain problems that have increased production costs; Large stimulus spending by advanced economies; And services improved after mobility restrictions were lifted and economic activity reopened.

According to the central bank, supply-chain bottlenecks and a lack of inputs put further pressure on prices in Mexico as consumer demand shifts more toward goods than services.

It estimates that it will take until the end of 2023 for inflation to return to its 3% target.

At the end of December, energy prices in Mexico were up 11.5% from a year earlier, and total food costs were up 11.63%, including a nearly 22% increase in the prices of fresh fruits and vegetables. Prices of core goods increased by 7.4% and services by 4.3%.

Write to Anthony Harrup at [email protected]

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