By Eliane Portillo

Inflation in 2011: 3.82%, a figure below the annual recorded in December 2010. The one in 2012, although it will have ups and downs, could be lower.

During 2012, Mexico inflation will suffer a recover that could reach levels close to 4.0% annual in the first half of the year, to later recover its downward motion and end at levels of around 3.7%. During 2011 Mexico’s inflation accumulated a growth of 3.82%, managing to be within the 3%+/- 1 percentage point target range of the Bank of Mexico.

On 2010 there was an improvement, given that in this period inflation was 4.4%. However, there is a significant rebound in almost all the components of the general price index during the last quarter of the year that just ended, which could be maintained in the first half of 2012.

By 2012, polls show that a 3.7% increase in prices is expected for the average consumer.

However, analysts estimate that pressures on agricultural commodities could continue in the coming months as a result of droughts recorded in recent months and that will affect the cycle of crops from the beginning of 2012; the Bank also estimated that the national index of prices to the consumer (INPC) during the first half of the year could play levels over 4% to later converge to annual 3.6%.

Analysts expect for 2012 less volatility and potential return on the level of exchange rate. On the other hand, the prices of basic products abroad could influence the decline in general inflation. And while increases in energy will continue, we see little likely that inflation will be greater than the objective of the Bank of Mexico.