Quotes from Barclays Capital:- Mexico CPI increased 0.55% m/m in October, lower than our below-consensus forecast (Barclays: 0.53%, consensus: 0.53%), due to higher fruit and vegetable prices, particularly in the second fortnight (1.9% 2w/2w). Core inflation was 0.17% (Barclays: 0.15%, consensus: 0.15%).- This print pushes our year-end annual forecast to 4.1% from 3.8%. However, we downgrade our core inflation forecast to 3.3% from 3.4% y/y. In fact, annual core inflation remains very stable at 3.3%, with annual services inflation at 3.1%.- Annual inflation has already started to decline in the second half of the month (4.28% in H2 Oct from 4.32% in H1) and should continue to go south. In seasonally adjusted terms, core inflation decelerated in October to 0.20% m/m sa from 0.30% in August, reflecting the absence of demand-side pressures. – Although headline inflation remains high, this would likely not prevent the central bank from acting if economic activity remains weak, as real rates would start increasing further. We maintain our expectation of a 25bp in the reference rate in the December 5 meeting, waiting for the IP report next Tuesday, November 11.
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