Quotes from Barclays Capital:- Mexico's CPI increased 0.41% 2w/2w in the first fortnight of December, surprising on the upside as fruit and vegetable prices jumped 5.79% 2w/2w, pushed by tomato prices (36.6% 2w/2w). On the other hand, core inflation was 0.20% 2w/2w lower than the consensus forecast (Barclays: 0.26%, consensus: 0.26%) and confirming no relevant demand side pressures and set on a declining trend in annual terms (3.26% y/y).- We believe that there are still no signs of pass-through effects to the CPI from the recent MXN depreciation as the upside surprise came from tomato prices. This shock should be temporal and with no relevant second-round effects, and headline inflation should decline in the coming prints. – Also, core inflation should reach below 3% levels in January. In this context, Banxico will remain on hold in the next January 29, 2015 meeting.
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