Inflation moderation in Mexico likely over: Societe Generale

Quotes from Societe Generale Cross Asset Research:

-Headline and core inflation in Mexico fell sharply to 3.07% yoy and 2.3% yoy in January from 4.08% and 3.24% in December. While the inflation deceleration was broad based, the sharpest one month fall in core inflation since early 2000 was primarily driven by the end of long-distance telephone charges, decline in energy prices (administered as well as non-administered) and the price falls in several services categories (although, some of this decline can be attributed to the base effect).

-We expect monthly inflation to stabilize in February estimating bi-weekly CPI to rise by 0.17% over the previous bi-weekly print, raising inflation to 3.10% yoy from 3.05%. Bi-weekly core inflation is expected to rise 0.16% over the previous print, leading to a slight rise in the full-month core inflation number. That said, the decline in inflation in January presents significant downside risk to the inflation outlook (SGe 2015: headline - 3.3%, core -3.1%).