indicators highlight slower expansion in the mexican economy, largely caused by global economic weakness. by next year, as the external environment improves, mexico ’ s economic activity is expected to post a healthier pace. also, in the medium term, structural reforms could enhance productivity. the financial volatility of the last few weeks has had significant implications for emerging markets. adjustments in mexico have been orderly. in the face of the possibility that uncertainty may continue, prudence should prevail on the part of creditors and debtors, and the authorities should remain alert in order to ensure that at all times financial markets operate normally. finally, an increase in annual inflation so far this year is due to negative supply shocks, reflected especially in the noncore component of the cpi. given the temporary nature of recent pressures, it is likely that inflation will soon resume a downward trend toward the 3 percent permanent target. bis central bankers ’ speeches

5. 7 percent, from 6 percent in november and a peak of 6. 6 percent in september. over the past three months, core cpi inflation has run at an annualized rate of 3. 1 percent, a noticeable drop from earlier in 2022. another encouraging sign is that higher inflation was less concentrated - the share of categories of different goods and services with inflation over 3 percent has declined in the past several months, from almost three fourths in early 2022 to less than one half in december. that's good news because it indicates that broader inflationary pressure across the economy is easing. now, here's why i am cautious about these latest results and why i am not ready yet to substantially alter my outlook for inflation. month - over - month core cpi inflation actually ticked up in december from november and is pretty much where it was in october and where it was in march when we began raising interest rates. although inflation measured over 12 months has been falling, december's reading is still close to where it was a year ago. core inflation was 6 percent year over year ( yoy ) in january 2022 and was 5. 7 percent yoy last month. thus, it basically moved sideways all year. so, while it is possible to take a month or three months of data and paint a rosy picture, i caution against doing so. the shorter the trend, the larger the grain of salt when swallowing a story about the future. back in 2021, we saw three consecutive months of relatively low readings of core inflation before it jumped back up. we do not want to be head - faked. i will be looking for the recent improvement in headline and core inflation to continue. wages, as i indicated earlier, are another stream of data that i will be watching for evidence of continued progress to help ease overall inflation. though recent hourly earnings data are a positive development, i need to see more evidence of wage moderation to sustainable levels. the federal reserve bank of atlanta's wage growth tracker has been running higher lately and has moderated less. the employment cost index for december won't be out until the end of this month. over time, we need to see wages grow more in line with productivity growth plus 2 percentage points, consistent with the fomc's inflation target. those are reasons that i am cautious about the recent good news, but it is good news. we have made progress. six months ago, when inflation was escalating and