Mexico Surpassess OECD Food Inflation Rate in January

Mexico witnessed one of the highest year-on-year increases in food inflation among the 36 member countries of the Organization for Economic Cooperation and Development (OECD) in January. The annual figure for Mexican food inflation reached 7.3%, surpassing the OECD average of 6.2% in the same category, indicating a worrisome trend.

According to the OECD Consumer Price Index report, although food inflation slowed down in January 2024, there are still countries where increases remain at high levels. Turkey, despite a reduction from 72% in December 2023, still recorded the highest food inflation rate at 69.7%. Other countries that exceeded the OECD average in January included Iceland with 8.9%, Norway with 8.7%, Greece with 8.3%, Spain with 7.4%, Mexico with 7.3%, and the United Kingdom with 7%. However, the remaining OECD countries collectively experienced a decrease from 6.7% in December 2023 to 6.2% in January 2024.

February reports from Mexico's INEGI indicated a three-month consecutive increase in inflation, primarily driven by the non-core component. In January, non-core inflation showed an annual variation of 5.24%, a notable increase from December's 3.39%. Breaking down the information reveals that agricultural products experienced a substantial annual fluctuation of 9.75%, driven by a staggering 21.78% variation in the prices of fruits and vegetables.

The Chief Economist for Mexico and Canada at Bank of America Securities explained that post-pandemic, there has been a reconfiguration in the weight of certain products, notably in the food, fruits, and vegetables categories. This shift could continue to exert upward pressure on inflation. INEGI is set to update the Consumer Price Index (CPI) around mid-year, aligning with the recommendations of the International Monetary Fund, and based on the results of the National Household Income and Expenditure Survey.

The OECD stated that the overall annual inflation across the 38 countries in the organization decreased to 5.7% in January 2024, down from 6% in December 2023. However, it noted that food and energy inflation continue to surpass general inflation, reaching 6.6% in January 2024.