Fruit and Vegetable Prices Rise in Mexico

According to the National Institute of Statistics and Geography (Inegi), the continued increase in fruit and vegetable prices caused the annual general inflation rate to rise to 5.61 percent in the first 15 days of July, its highest level in 37 fortnights.

The volatility in the previous fortnights in agricultural prices, mainly due to the acceleration in fruit and vegetable prices, which recorded a fortnightly inflation rate of 6.15 percent and an annual rate of 25.69 percent, said Janneth Quiroz Zamora, Director of Economic, Exchange, and Stock Market Analysis at Grupo Financiero Monex.

Some products that stood out with the highest annual increases in the first fortnight of July were chayote, with 121.65 percent; tomato, with 81.27 percent; onion, 47.66 percent; avocado, 33.43 percent; poblano pepper, 19.65 percent; prickly pear, 17.12 percent; beans, with 16.36 percent; and eggs, with 12.58 percent.

According to Gabriel Lozano, Chief Economist for Mexico at JP Morgan, the inflation report is another cause for concern for the Bank of Mexico, ahead of the August 8 meeting, where a loss of conviction regarding a 25 basis point cut to the benchmark interest rate is expected.

"The big surprise in inflation could act as a deterrent for most members (of Banxico's Governing Board), as, in the end, general inflation is the objective indicator, and the magnitude of the impact on raw food in the first fortnight of July was much higher than previous surprises," he considered in an analysis.

On the other hand, the products that most explained general inflation during the fortnight, according to their level of incidence on the National Consumer Price Index (INPC), were: tomato, with an increase of 27.97 percent; onion, with 16.72 percent; chayote, with 13.41 percent; avocado, with 10 percent; and orange, with 7.09 percent.