Inflation in Mexico is running at an annualized rate of around 6.20 percent but is “not out of control,” according to Agustin Carstens, governor of the Banco de Mexico, the nation’s central bank.
Speaking at a banking event this week, Carstens said the positive results of mid- and long-term monetary policies will soon kick in and the volatility caused by the change in the U.S. federal administration is dissipating.
“Little by little we are heading toward our goal of three percent (inflation),” he said.
In 2016, Mexico registered inflation of 3.36 percent, slightly higher than Banco de Mexico’s goal of three percent.
The turn-of-the-year hike in the cost of gasoline, leading to higher transportation costs, have led to increases in basic products, especially foodstuffs. Avocados, for example, are at their highest level for almost two decades.
The strengthening of Mexico’s currency over the past month should help the inflation rate level out, economists agree.
Since weakening to 22.04 to the U.S. dollar in mid January, the peso has recovered to an average of around 18.70 in May.
Analysts say the perceived softening of U.S. President Donald Trump’s stance on the North American Free Trade Agreement (Nafta) has also been a factor in the peso’s recovery. The renegotiation process s due to begin in August.