Although the most recent reading was significantly affected by a hike in agricultural prices, the upswing has been underpinned by a gradual increase in core inflation. In fact, on average during the second quarter, core inflation rose while non-core inflation fell. The most prominent factor pressuring core price changes seems to be some pass-through from the weakened Mexican peso vis-à-vis the U.S. dollar.
Although there is no evidence of demand pressures at this moment, available indicators such as the use of manufacturing capacity and the output gap, especially that measured for non-tradable goods whose price changes could better reflect domestic monetary conditions, suggest that slack may already have disappeared. Furthermore, the outlook for inflation has deteriorated somewhat, as reflected by several factors.