Mexico’s inflation is at worrying levels, says central bank

The deputy governor of Mexico’s central bank (Banxico), Jonathan Heath, warned on Tuesday that inflation levels in the country’s economy are “worrying.” This comes after it was learned that inflation closed at almost 5% in interannual terms in June.

In a message published on X, the specialist said that inflation, at 4.98% year-on-year according to the National Institute of Statistics, is the highest in the last 12 months. He also warned that the annual inflation rate for the second half of June was 5.17%.

“Very worrying,” said Heath, recalling that the consumer price index in Mexico is above the target set by Banxicoapproximately 3%.

According to data from the statistics institute, inflation in Mexico has risen steadily over the past four months. In June, the increase was 0.38% and exceeded the 5.06% inflation recorded in June 2023.

According to the agency, the agricultural sector increased by 10.38% in June and the fruit and vegetable sector increased by 19.7% year-on-year. The services sector, which usually exerts the greatest pressure on the economy, rose by 5.15% last month.

For all the above, Heath, who is a Mexican economist and university professor, recommends that There is no premature reduction in interest ratesbecause inflation has not been controlled.

In an interview, Heath explained that Mexico’s interest rates, currently around 11%, should begin to be reduced as general inflation is seen to be resumed a downward trend and that the services sector breaks the lateral inflationary trend that it currently has.

That narrative has been maintained by Heath for days. At the beginning of the month, the economist said he agreed with the decision of the US Federal Reserve, to postpone the reduction of interest rates until there is more “benign data” on inflation.

In his opinion, the US scenario also applies to Mexico. “I totally agree with Jerome Powell,” said the expert.

What can Mexicans do?

Considering that high inflation levels have their main impact on the pockets of Mexicans, They must resort to options to protect themselves of the economic phenomenon commonly caused by mistaken or poorly used monetary policies.

Among the options for Mexicans, bitcoin (BTC) stands out, the largest digital asset on the market, which is a long-term inflation shelter and a secure, decentralized way to maintain the value of money.

Due to its monetary policy, bitcoin is an asset that is almost insensitive to inflation. This is because, unlike fiat money, such as the Mexican peso, BTC does not depend on the decisions of governments or central banks for its issuance. In reality, the production of BTC depends on a decentralized system that always works and practically autonomously

Due to its controlled issuance, and the growing demand for this digital asset, BTC is a currency that can generate interest. for long-term savers. It should be remembered that bitcoin has increased in price by almost 10,000% in the last 10 years.

Mexicans already know bitcoin from before, to the point that this digital currency was included in the recipe to face inflation in 2022, when the consumer price index reached 8.76% in the month of September.

Now, in 2024, bitcoin seems to reappear reflected in the strategies of Mexicans for a new inflationary storm in his country. An example of this is that Mexico is currently the 16th country in the world with the highest adoption of cryptocurrencies, according to the blockchain analysis firm Chainalysis.

The figure shows that the interest in BTC and cryptoassets is growing steadily. In 2022, Mexico was ranked 28th in the Chainalysis ranking, confirming progress in the adoption of digital assets by Mexicans.