Exchange Rate and Inflation II


Buenos dias!

This is Augusto Corallo from Mexico City.

The effect of volatile prices in overall inflation is linked to the increase in non-core inflation (volatile prices), mainly pressured by the annual growth of agricultural goods, however, the portion of goods there is a slight contamination prices for depreciation weight.

The director of Market Strategies Finamex Casa de Bolsa, stated that inflation in the first half of February estimated an increase in goods of 0.6%, however, the official result was 0.11%, which was considered as the beginning of involvement in the exchange rate on prices.

In this regard, the expert predicted that the depreciation of the Mexican peso has already begun to impact inflation, ie since last year prices began to recognize the level reached by the exchange rate, close quotes to 17.30 pesos in the last month of 2015.

Then, It is explained that in 2015 the devaluation of the Mexican currency had a slight impact on inflation of 0.6% to close at 2.13%; this year will have an incidence of 1.5%, with the prospect of finishing in 3.2%, and in 2017 will be 0.9%, ie, inflation would be affected, at most, 3% within three years, the rise in the exchange rate.