Strong reversal in perishable prices drives Mexico CPI higher

Mexico CPI increased 0.41% m/m in March, driven mostly by a strong reversal in perishable prices, gasoline prices at the border and tourism services ahead of the Easter holiday. Core inflation was 0.26% m/m (Consensus: 0.25%, Barclays: 0.20%).

"This print comes in line with our year-end forecast of 2.8% y/y, since we were expecting a reversal of perishable prices in the first fortnight of the month, which in the end materialized in the second one. In fact, tomato prices explain 14bp of the 41bp total monthly increase." - said Barclays

Although the CPI surprised on the upside, relevant FX pass-through effects not visible. Core goods inflation was 0.15%, which set annual inflation of that component at 2.6%, well below 3% and able to absorb any further pass-through contamination in the coming months. In that sense, this print does not have a relevant implication for our monetary policy call. 

"We believe Banxico will wait to hike until the Fed does. This will likely not happen until September, allowing Banxico to refrain from hiking until October 2015." - added Barclays