Inflation on Target in Mexico as Prices Fall

Mexican consumer prices fell in April on lower electricity rates and a drop in vacation costs after the Easter holiday period, leaving annual inflation close to the Bank of Mexico’s 3% target.

The consumer-price index fell 0.26% last month for a 12-month rate of 3.06%, the National Statistics Institute, known as Inegi, said on Thursday. Core CPI, which excludes energy and fresh fruit and vegetables, rose 0.14% from March and was up 2.31% from a year before.

Residential electricity rates fell 14% as summertime subsidies designed to help cover the cost of air conditioning went into effect in 12 cities.

Aside from the subsidies, which are removed in the autumn, overall electricity rates in Mexico have fallen with a drop in the price of fuels used to generate power.

The state-run utility Comision Federal de Electricidad said this week that industrial rates are currently down between 23% and 31% from a year earlier, while commercial rates are 10%-20% lower. The drop in residential rates is between 2% and 10%.

Vacation costs, including air fares, fell in April after increasing the previous month ahead of the Easter holidays.

In leaving interest rates unchanged last week, the Bank of Mexico reiterated its view that inflation will hold around its 3% target this year and end the year below that level.

Write to Anthony Harrup at [email protected]

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