If there inflation is consistently above the projection estimated by Bank of Mexico, “We are going to have to react in a consistent way”, observed the Lieutenant Governor Jonathan Heath.
The decision to raise the interest rate or the speed of the increase will depend on the evolution of five data: From October inflation, on how the variation in prices will differ from the projection estimated by Bank of Mexico (currently at 6.2%), the path that underlying inflation will follow, market expectations and the economic recovery. Without the evolution of these data, it is not possible to anticipate what the movement will be, he said.
In a press conference at the end of the presentation of the book “Readings in what the indicators indicate”, where he was coordinator and author of one of the 36 readings, he explained that he is more concerned about the trend brought by the Underlying inflation, which “is the core of daily household consumption.”
We have been with inflation above the target for eight months. “But I am more concerned about the upward trend in Underlying inflation which has been on the rise for 11 months (…) because it saves 70% of what we consume and is a core part of daily household consumption ”.
“As Javier Salas (former Director of price, wage and productivity measurement in Banxico between 1999 and 2010) said, inflation is a social disease and it hits everyone. It motivates the loss of purchasing power of those most in need and must be fought consistently ”.
Pandemic inflation
The central banker considered that the change in consumption patterns brought about by the pandemic and that is being reflected in the inflation will be reversed as the economic activity. It is what scholars like him identify as “Pandemic Inflation”.
2020 was an exceptional year and 2021 still brings some of that, he admitted. But in 2023 and 2024 we will return to a more normal level of consumption and it will be a challenge for Inegi to ensure that the inflation indicator and the weights do not reflect a temporary pattern of the pandemic in the future.
During the presentation of the book, where the Governor of Banco de México, Alejandro Díaz de León. He is also the author of one of the readings, the deputy governor affirmed that the largest capital of the Bank of Mexico they are not its international reserves, but its human capital. To illustrate, he explained that 19 of the 32 readings that make up the book are by officials and former officials of the central bank.
Information and communication, keys
Governor Díaz de León, who will leave office next December, explained when presenting the book that as long as the information is directed to more audiences, any citizen will have the elements to make better decisions.
That is the service, he said. In providing the best information for specialists who use statistical information on a daily basis, such as citizens who come sporadically to review the indicators. Statistical information is a useful instrument for decision-making and will contribute to a more prosperous future for the country, and its understanding is one of the greatest contributions of this work, he said.
In the presentation of the book, the President of Inegi, Julio Santaella, also participated, who commented that the use of statistical information helps to promote the culture of knowledge and what happens in the country.
“The indicators are not static. The economic reality changes and they must adapt to the times, because it is the basis for public policies, “he said.
The three-volume work coordinated by Deputy Governor Heath is available for free on the Inegi website and will also be available for sale in physical form, in the shops of the Interactive Museum of Economics (MIDE) and in the Museum of the Bank of Mexico.
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Reference-www.eleconomista.com.mx