The rise in inflation poses a dilemma for the newly installed governor of the Banco de México, Agustín Carstens. As inflation is overshooting, he should tighten monetary policy. Such a move, however, would threaten to derail the economic recovery.
The main reason for the rise in the consumer price index in January was a jump in fuel, public transport, telephone, beer, and cigarette prices. The last three saw their tax rates increase in January.
The biggest price jump in January was a 5.27% increase in metropolitan bus ticket prices. This had a major effect on the overall rate because of the sector's heavy weighting in the overall index. Onion prices jumped by 50% in January, but this is largely the result of the strange weather which has affected supplies.
The January figure is the highest monthly inflation rate since November 2008, when the rate was 1.14%. In January 2000 the inflation rate was 1.34%. The alarming thing for policymakers is that the price of the canasta básica (the subindex of commonly consumed foods and household goods) rose by 1.48% in January.
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