Mexican ag, LPG prices drive July inflation
Gains in agriculture and LPG gas price helped drive Mexico's headline inflation in July to its highest level since May 2023, although core price gains continued to ease.
The consumer price index (CPI) rose to an annual 5.57pc in July, up from 4.98pc in June and increasing for a fifth consecutive month, Mexico's statistics agency Inegi said today.
A big driver behind the July reading are fruit and vegetable prices, which climbed by 24pc in July, compared with 18pc in June.
Farm goods, and tomatoes in particular, have been hit by a double dip of bad weather with two months of extreme drought before flooding rains began to hit in late June at an active start to this year's hurricane season.
Also hitting the consumer price index (CPI), energy inflation reached 9.2pc in July from the same month in 2023. The group was led by higher LPG prices, up 26pc over last year. Low-octane gasoline prices were next highest, up 6.9pc. Electricity prices followed, rising 5.35pc on an annual basis. Domestic natural gas was the only energy item to decline, dropping 3.4pc in July.
Banorte, however, stressed that core inflation – which excludes volatile food and energy – did ease again in July, slowing to 4.05pc for the month from 4.13pc in June, marking 18 consecutive months of easing.
In a note, Banorte said energy prices stand to benefit from base calendar effects in the coming months.
Mexican bank Citibanamex noted the lower core as well in a note, adding how the recent rains are beginning to reach the most drought stricken areas, and this should help begin to contain non-core prices. "We expect annual headline inflation to resume a gradual downward trend starting in August, and we maintain our estimates for the end of 2024 at 4.4pc for headline inflation and 4.1pc for core inflation," the bank said.
The CPI increased by 1.05pc in June from the prior month, when it posted a 0.38pc monthly gain, said Inegi.
The central bank's monetary policy committee today lowered its reference interest rate to 10.75pc from 11pc, its first reduction since March.
The central bank cited the continued drop in core prices, adding the inflationary environment might allow for further rate adjustments, considering "global shocks will continue fading and the effects of weakness in economic activity."
By James Young
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About 42pc of US Gulf oil output still shut on Francine
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India’s higher LNG regas rates receive customer flak
India’s higher LNG regas rates receive customer flak
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Regasification rates in Japan LNG terminals are around $0.5/mn Btu, while rates at terminals operated by Jera, like the 22.9mn t/yr Futtsu LNG facility, are much lower, according to market participants. Regasification rates in China, however, are also higher, on a par with India as PipeChina's eight LNG terminals, including the largest 12mn t/yr Tianjin terminal in north China, and 6mn t/yr Dalian terminal in Liaoning. These are charging $0.7-1.3/mn Btu for unloading and regasification, sources say. Regas rates across the world are mostly determined by market forces based on demand fundamentals compared with fixed prices charged by Indian terminal operators. But record regasification rates have not stopped city gas utilities and industries from using Petronet and Shell's terminals to import the fuel, enabling Petronet to operate Dahej at around 109pc in April-June, a record for the facility, according to oil ministry data. Hazira, which in the past has operated at over 80pc, operated at 46.5pc in the second quarter. Capacity usage at LNG terminals in Europe, China and Japan are mostly in the range of 30-50pc, and the rest of India's five terminals with a combined 25mn tons a year in capacity operate at 20-40pc of that. Judging by deliveries in January-July this year, India's LNG imports stood at 16mn t, compared to an annual installed import capacity of 47.7mn t. Strategic location Importers in the country have little option of switching to other facilities because of the strategic location of Dahej and Hazira, which are well connected by major pipelines to the country's western region — where consumption is strong. 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Argentina's big energy hopes face reality
Argentina's big energy hopes face reality
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British Steel Scunthorpe rolling may stop if BF closes
British Steel Scunthorpe rolling may stop if BF closes
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