A third of purchasing power was lost due to inflation in Mexico

MEXICO CITY (El Universal).— Inflation in Mexico picked up speed in July and reached its highest level in the last 14 months, according to the report that Inegi released yesterday morning, Thursday.

After hitting a low of 4.3% in October 2023, the so-called tax on the poor reached 5.6% last month and exceeded the forecasts of 23 of 33 banks, brokerage firms and analysis groups that CitiBanamex consulted days ago.

With this result, the inflationary tax has accumulated an increase of 32.9% in 68 months of President Andrés Manuel López Obrador’s administration, specifically from December 1, 2018 to the end of July of this year.

That is, the national currency lost 32.9% of its purchasing power, which means that a thousand peso bill, the highest value currently, can only buy the equivalent of 671 pesos at the beginning of the six-year term.

This loss eclipses the 6.2% appreciation that the peso has had against the dollar since the self-proclaimed Fourth Transformation began, according to wholesale operations reported by Bloomberg.

Inegi monitors the prices of nearly 300 products and services sold in 55 cities across the country. From this list, chayote stands out as the one that has become more expensive since the beginning of the six-year term.

Cultivated since ancient times, the vegetable has shot up 449% during the current administration, meaning the price has multiplied by more than five, according to Inegi.

Behind the increase is the intense drought in Veracruz, where 85% of the national chayote production comes from and, as if that were not enough, the food that was in good condition was damaged by the heavy rain brought by hurricane “Beryl” in the first days of July.

Two weeks ago, most analysts expected Banxico to cut its rate on Thursday, but the rise in prices and the depreciation of the peso made it difficult to meet the 3% inflation target established by the institution governed by Victoria Rodríguez Ceja. However, Banxico ultimately decided to cut it by 25 basis points.