Inflation to stay near Banxico’s target near term

Mexico's inflation slipped below 3.0% (Banxico's target) in May to 2.88% for the first time in a decade and remained largely unchanged in June. The core inflation remained at its lowest level ever at 2.3% and food inflation fell, therefore, the June inflation rate rate reminaed stable. 

Societe Generale says, "We do not see anything seriously shaking the status quo and expect inflation to rise only modestly over the next twelve months and primarily when the effects of moderation in telecom prices and a few other sub-categories in housing ebbs." 

Headline inflation remains close to Banxico's target level of 3.0% post the sharp decline in January. 

Societe Generale estimates, "Inflation rate is likely to remained unchange at 3.2% and 3.4% for 2015 and 2016 respectively, although core inflation looks marginally weaker. Growth in aggregate demand will still be the key driver for both inflation expectations and monetary policy in the medium term."