Inflation in Mexico shoots up to 7.36% in 2021, the highest in 21 years

The rise in prices of staples such as fruits and vegetables due to inflation in Mexico. Angélica Ortiz, a housewife shopping at the Central de Abastos in Mexico City, one of the largest in the world.Seila Montes

Mexico had not experienced such a high price increase in 20 years. The country’s economy closed in 2021 with an annual inflation rate of 7.36%, according to the National Institute of Statistics and Geography (Inegi). The National Consumer Price Index (INPC) had an increase of 0.36%, compared to the previous month.

In the midst of the efforts of the Mexican State to promote economic recovery due to the coronavirus crisis, this figure breaks with the objectives established by the Bank of Mexico, which is located in an estimated range of 3%. Until now, there has been no action that can handle the price increases.

Gabriela Siller, director of economic analysis at Banco Base, estimates that for all of 2022 inflation will be above 4% at an annual rate, approaching this level by December to close the year close to this figure. “During the year new inflationary pressures could be observed due to the prolongation of bottlenecks in global supply chains, volatility in the prices of raw materials, mainly oil and agricultural products, and the economic reactivation of the service sector” , indicates.

This rise in prices is a phenomenon that many young Mexicans had not faced in their lives, despite the efforts that have been made to contain the rise, such as the increase in benchmark interest rates by the central bank, which it was 5.5% in December to try to curb the runaway inflation. “It is likely that Banco de México will continue to raise its target interest rate in the decision it makes on February 10, and then continue to raise the interest rate at the same rate as the Federal Reserve,” says Siller.

The price of food in the basic basket is the ones that have hit the pockets of Mexicans the most. According to Inegi, the products that had the greatest impact on inflation in December were beef, lemon, low-octane gasoline, chicken and banana, all of them products of the basic food basket.

Some products presented slight decreases, such as green tomato, which had increases of up to 161% last year, as well as serrano pepper, LP gas and other vegetables such as tomato. The food price index, prepared monthly by the Food and Agriculture Organization of the United Nations (FAO) and which shows the evolution around the world, closed last year with an increase of 28.1%.

Mexico is no stranger to the world economic situation, in suspense at the growing number of infections of the omicron variant of coronavirus.

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