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News > Mexico

Mexico Warns About Ukraine’s Situation Effects Over Economy

  • Mexican Bank foresees higher inflation by the end of the year. Mar. 10, 2022.

    Mexican Bank foresees higher inflation by the end of the year. Mar. 10, 2022. | Photo: Twitter/@MonitorSur

Published 10 March 2022

According to economists researchers, the war in Ukraine could raise inflation by 10 percent.

The Mexican Banco Base Chief economist adverted about how Ukraine's current military conflict could drive inflation up to 10 percent by the end of 2022.

Mexico: Surge in Crude Oil Prices Amid Situation in Ukraine

Data published by the national statistics agency INEG on Wednesday indicated that the annual inflation rate rose to 7.28% from 7.07% from January to February of the current year. Resulting from the Russian special military operation launched on February 24, prices worldwide have risen, affecting Mexico as well, which could lead to higher inflation.

As a consequence of the Ukrainian crisis, the Bank of America Securities (BofA Securities) warned that fuel prices in Mexico would increase, and foresees an inflation increase to 6 percent from 5 percent by the end of the year. Gabriela Siller, Banco Base's chief economist, pointed out that price increases could exceed that forecast, as they have evidenced a fast growth since the military conflict began in Europe.

"The inflation forecast for the end of the year could be revised toward … 8% if similar inflationary pressures to those seen during January and February are seen between March and June," she stated. Goods' demands during the pandemic respecting to supply chain disruptions have already marked up inflation considerably. "If the inflationary pressures persist until the end of the fourth quarter, the risk rises that … annual general inflation will approach 10%," noted the economist.

Economia | Guerra En Ucrania can take inflation in Mexico to 8% and up to 10% at the end of the year: Banco Base Everything will depend on how long the volatility of international prices of raw materials continues due to the conflict

"In the short term (the end of the second quarter or start of the third) it cannot be ruled out that … [inflation] could approach 8% annually," said Mexican bank CIBanco referring to higher inflation will be seen due to the increase in costs of materials. One of them is oil, a rate recorded as the highest since 2000.

"High inflation will be more persistent than we had anticipated, both in Mexico and at the global level," posted on his Twitter account Bank of México board member Jonathan Heath, where he decreed, according to the data, core inflation that hadn't peaked in February will therefore continue to rise.

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