Back-to-School Costs Push Mexico’s Inflation to 3.42% in Early September

Mexico City — Mexico’s inflation accelerated to 3.42% in the first half of September, lifted by back-to-school costs, higher LP gas prices and a rebound in fresh produce, according to the latest biweekly reading.

The figure came in above analyst expectations and above the historical average.

Banamex attributed the increase to rising prices for fruits and vegetables — most notably tomato, onion and lemon — as well as the seasonal jump in education costs at the start of the school year and higher LP gas prices.

“The biweekly variation responded to the rebound in fruit and vegetable prices — where tomato, onion and lemon stand out — as well as the seasonal increase in education at the start of the school year and a rise in LP gas prices,” the bank said in a report.

Core inflation, which strips out volatile prices, ran at 3.79% annually. Within that measure, services rose 4.33%, while food, beverages and tobacco climbed 4.59%.

Services had been a source of concern for Mexico’s central bank, Banxico, because they had yet to show a firmer downward trend. Banamex expects them to return to their historical average only gradually.

“The aggregate services component would decline toward its long-term average very gradually, because it will remain under upward pressure from the accumulated increase in labor costs,” the bank said.

Among the products that posted the steepest price declines in the first half of September were professional services, potatoes, tequila, hair products, automobiles and oranges.