Mexican inflation remains below central bank target

Mexico’s annual inflation rate rose less than expected in the first half of April, remaining below the central bank’s target and giving policymakers room to keep interest rates unchanged.

Inflation in the 12 months through mid-April MXCPHI=ECI was 2.60 percent, the national statistics institute said on Friday, below a forecast 2.71 percent rate in a Reuters poll and up from 2.49 percent in the second half of March.

Mexico’s central bank expects inflation to rise slightly above its 3 percent target sometime in 2016, but fall back toward the target by the end of the year.

Last month, the central bank held its main interest rate at 3.75 percent, but warned it could raise borrowing costs if a weak peso begins to push up inflation expectations.

The bank hiked rates in February and December after a deep slump in the peso, but the currency has recovered somewhat in the past two months.

Consumer prices fell 0.34 percent in the first half of April MXCPIF=ECI, more than a 0.24 percent drop projected in the poll, as prices for electricity, tomatoes and onions fell.

The core index MXCPIH=ECI, which strips out some volatile food and energy prices, rose 0.15 percent, above an expected 0.12 percent.

The 12-month core inflation rate MXCPIC=ECI rose to 2.79 percent, above both the 2.76 percent expected in the poll and the 2.66 percent seen in the second half of March.

(Reporting by Michael O’Boyle; Editing by Paul Simao)

Puerto Vallarta News

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