Inflation in Mexico continues to rise in the first half of February, with core inflation rising to its highest level since 2001.

The National Statistics Institute said that the consumer price index rose 0.42 percent in the first two weeks of the month, pushing the 12-month inflate rate up to 7.22 percent from 7.07 percent at the end of January, according to a Market Watch News report.

The recent increase in core inflation implies that the Bank of Mexico is struggling to manage price pressures, according to emerging markets economist at Capital Economics, Nikhil Sanghani.

Sanghani said that the recent price surge in global commodities can be linked to the Russia-Ukraine crisis, and will keep inflation high in the coming months. He added that the Bank of Mexico's "tightening cycle has much further to run."

However, global economic activity continues to recover, albeit at a slower pace, with differences between countries and sectors as compared to previous months.

The bank said that the recovery of the local economy of Mexico continues to be "heterogeneous between sectors."

Banxico also said that interest rates worldwide have risen with the acceleration in prices, particularly in advanced economies, according to a Xinhua Net report.

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Russia-Ukraine Crisis and Mexico Inflation

A top International Monetary Fund official said that the Russia-Ukraine conflict would likely further increase energy costs and commodities prices for many countries, which could mean elevated inflation rates for longer.

First Deputy Managing Director Gita Gopinath noted that the situation now was different than in 2014 when Russia annexed the Crimea region of Ukraine.

Gopinath noted that energy prices fell quite sharply amid low demand and abundant shale gas supplies, according to a Reuters report.

Gopinath added that if the current conflict were to happen this time around, many would see an increase in energy prices.

She noted that prices of other commodities exported by Russia were also rising and could cause a "bigger, broad-based increase" in commodities prices if the conflict ramps up.

One board member of Banxico argued that the bank has a "relatively solid monetary position" as compared to the U.S., which gives it some space.

With the rising inflation, the U.S. Federal Reserve is seen to start raising interest rates next month.

The board member said that Mexico must "not assume a mechanical rule with respect to the Federal Reserve's adjustments." Instead, it should act by reviewing all the information available at each moment in time, according to a Bloomberg Quint report.

British research firm Capital Economics said that the Russia-Ukraine conflict will generate some economic tailwinds for Latin America, including further rises in inflation. However, Latin American grain and oil exporters should benefit from sustained price tailwinds while higher energy prices could put pressure on net energy importers.

Meanwhile, Juan Angel San Martín, an economist at Bci Estudios, the research unit of Chilean bank Bci, said that the conflict with the strengthening of dollar would pressure Latin American currencies.

Latin American leaders have condemned Russia's aggression on Ukraine.

Colombian President Iván Duque noted that they reject war and join international voices calling for the withdrawal of Russian troops from Ukraine.

Chile echoed Colombia's opinion regarding the Russia-Ukraine conflict.

On the other hand, Mexican President Andres Manuel Lopez Obrador expressed a neutral stance and promoted dialogue.

Brazilian President Jair Bolsonaro expresses support to Brazilians in Ukraine but has maintained silence on the matter.

Venezuelan President Nicolás Maduro has publicly expressed support for Russian leader Vladimir Putin. Maduro is a Kremlin ally.

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This article is owned by Latin Post
Written by: Mary Webber

WATCH: Mexico's Inflation Spike Likely Temporary, Says Herrera - from Bloomberg Markets and Finance