The National Institute of Statistics and Geography (INEGI) reported that the inflation rate in Mexico during the month of May was 5.84%, lower than the 7.65% recorded in the same month of the previous year. At first glance, this might seem to be a positive indicator of price reduction; however, specialists warn that this is not the case. Despite the decrease in the inflation rate, prices will remain high and even tend to rise. Falling inflation simply means that prices are increasing at a slower rate compared to the previous year. For example, if we compare this year's May inflation rate (5.84%) with last year's (7.65%), it does not mean that prices fell by 5.84% in May this year, but rather that they rose less compared to last year. This situation reflects a phenomenon that has been occurring for decades, where prices do not return to the starting point after an inflationary increase. Although inflation is decreasing, it is necessary to keep in mind that prices will continue to rise, albeit at a slower pace. Recovering purchasing power in the face of inflation is a generational task that will require long-term strategies. Although external factors have influenced inflation, it has taken time to control and reverse it. Prices are unlikely to return to previous levels unless deflation occurs, which is a generalized reduction in prices in the economy. However, deflation is difficult to control and can have negative effects on the economic structure. In short, it is necessary to get used to current prices and even expect them to rise further in the future. Returning to previous price levels will be unlikely in the short term, and if it happens, it may be indicative of more serious problems in the economy. Source: Alto Nivel
