HSBC. Inflación: La inflación no subyacente registró una caída considerable durante la primera quincena de junio.

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• La inflación general aumentó 0.02% en la primera quincena de junio, por debajo de nuestras expectativas (HSBC: 0.09%) y del promedio en los últimos años para este mismo periodo (0.09%). Este resultado fue altamente influído por la reducción de 0.42% del componente no subyacente, que a su vez fue impactado principalmente por una reducción en los precios agrícolas.
• Por su parte, la inflación subyacente se aceleró más rápido de lo previsto en la primera mitad de junio debido a que el subíndice de mercancías no alimentarias continuó creciendo.

• HSBC espera que la inflación cierre el año en 3.3%, impulsada por el eventual reflejo del moderado traspaso de la depreciación del peso en los precios y la aceleración estacional de los precios de la gasolina.

Mexico

Inflation: A sharp non-core CPI drop showed up in H1 June

Headline inflation came below market expectations on the back of a considerable drop of the non-core component. This hefty decrease was mainly explained by agricultural and poultry prices. In contrast, gasoline and natural gas prices increased, which is consistent with our view that this pattern will continue to be present in the coming months due to the new formula to determine gasoline prices. Meanwhile, core inflation accelerated faster than anticipated in early June as the non-food merchandise sub-index continued to grow, reflecting a moderate but persistent FX pass-through effect. All in all, we reiterate our recent change of forecasts for the end of 2016 and 2017.

Facts

The National Institute of Statistics (INEGI) released the bi-weekly CPI inflation data for the first half of June 2016, coming in at 0.02%, below our and consensus expectations (HSBC: 0.09%; Bloomberg: 0.10%) and also below the average for that period of the year (0.09%). This result took the annual rate to stand at 2.55% (HSBC: 2.62%; Bloomberg: 2.63%). The bi-weekly core inflation rate came out above expectations at 0.16% (HSBC: 0.13%; Bloomberg: 0.14%), taking the annual rate to 2.98%. Meanwhile, the non-core component surprised on the downside, as it decreased 0.42% mainly due to a reduction in agricultural prices.

Even though the core component accelerated more than anticipated, headline inflation came below expectations on the back of a sharp contraction of the non-core component. This hefty drop was mainly explained by agricultural prices. In particular, fruits and vegetables prices decreased 1.0% during the first half of the month, while poultry did it by 0.8%. The first sub-index reflects price reductions in key crops such as green tomato, lemon and onion, which together subtracted almost 12bp to the overall CPI, while the second one shows price drops in poultry that subtracted 5bp to the overall rate. Even though such price drops drove the non-core component, it is worth noticing that energy prices increased in early June, mainly gasoline and natural gas prices. We believe that this pattern will continue to be present in the coming months due to the new formula to determine gasoline prices that incorporates seasonal rises stemmed from the «driving season» in the US.

The expansion of the core component was explained by the performance of both merchandise and services prices. In the case of merchandise prices, we highlight that the non-food merchandise sub-index continued to accelerate slightly faster than other years, suggesting that the pass-through from the MXN depreciation prevails. In fact, the annual rate of this sub-index stood at 3.4%, which reflects that it is putting pressure on the core component.

All in all, we reiterate our recent change of forecasts for the end of 2016 and 2017. We believe that inflation will close the year at 3.3% as the silent pass-through from the Mexican peso depreciation and the seasonal acceleration of gasoline prices will eventually reflect on the CPI inflation. (See: Riskier business: lower GDP, higher inflation, 14 June).

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