“We do not see any risk of inflation rising,” he said.
Mexico is struggling to tame extremely high inflation and the Bank of Mexico raised its key interest rate by 600 basis points to 10.0% through mid-2021 in an effort to ease price pressures.
Annual headline inflation in Latin America’s second-largest economy eased to 8.14% in the first half of November from 8.53% a month earlier. Central bank board member Jonathan Heath called the closely watched core price index the bank’s biggest concern, which continued to rise to 8.66%.
Gabriela Siller, an economist at Banco Base, pointed to three reasons why she believes the planned wage increase will further pressurize inflation, even though some wage increases are already baked into inflation forecasts. .
“One, it’s a very sharp increase; two, it’s not accompanied by gains in productivity; and three, we’ve had many years going on with minimum wage increases,” Siler said.
Luis Munguia, head of Mexico’s National Minimum Wage Commission (CONASAMI), said prices are expected to remain nearly stable because labor costs are already low in Mexico.
“Here we still have some margin,” he said.