MEXICO CITY, March 9 (Reuters) - Mexico's annual inflation rate cooled in February to its lowest in 14 months despite some sharp increases in food prices, keeping pressure off the central bank to raise interest rates soon.
Consumer prices rose 3.57 percent in the year through February, in line with expectations and slowing from a 3.78 percent rate in January, central bank data showed on Wednesday.
Most economists expect the Bank of Mexico, the country's central bank, will wait until early next year to raise interest rates. Regional peers Brazil, Chile, Peru and Colombia have hiked rates this year to fight inflation, and Thailand hiked on Wednesday.
Compared with the rest of Latin America, Mexico's economy took a bigger hit during the global recession because of its especially close trade ties with the United States. That has given Mexico's central bank more room to leave rates low.
"The inflation data reinforces the view that the Bank of Mexico will hold rates steady for some time more," said Santander economist Rafael Camarena, who expects central bank policy-makers to hike in January 2012.
The yield on Mexico's one-year interest rate swap was little changed following the data, suggesting investors had not significantly shifted their bets on the direction of monetary policy over the next year.
Policy-makers last week said the economy would likely not be strong enough to boost inflation until mid-2011.
Also easing inflation pressures, a tax hike that went into place January 2010 has been falling out of the 12-month reading this year.
CROP FAILURES
At the same time, policy-makers have said the country's inflation outlook has worsened because of domestic crop failures, high international grain prices and the possibility that the peso could weaken because of conflict in the Middle East and North Africa.
Prices for tomatoes, which are widely used in Mexican cooking, surged 18 percent in February alone following a severe cold spell that has damaged crops in the country's north. At the same time, prices for zucchini and limes fell just as sharply.
Staple corn tortillas prices jumped 2 percent during the month.
All told, consumer prices rose 0.38 percent in February after rising 0.49 percent in January, according to non-seasonally adjusted figures. The core index, which strips out some volatile food and energy prices, rose 0.40 percent during the month.
Central bank chief Agustin Carstens has said policy-makers might have to raise interest rates if the crop failures lead to higher inflation expectations. So far, there has been little sign of this. Inflation forecasts only inched higher in a poll of analysts released by the central bank on March 1.
The central bank has an inflation target of 3 percent but says it can live with readings one percentage point higher or lower.
Source: Reuters
www.reuters.com
Consumer prices rose 3.57 percent in the year through February, in line with expectations and slowing from a 3.78 percent rate in January, central bank data showed on Wednesday.
Most economists expect the Bank of Mexico, the country's central bank, will wait until early next year to raise interest rates. Regional peers Brazil, Chile, Peru and Colombia have hiked rates this year to fight inflation, and Thailand hiked on Wednesday.
Compared with the rest of Latin America, Mexico's economy took a bigger hit during the global recession because of its especially close trade ties with the United States. That has given Mexico's central bank more room to leave rates low.
"The inflation data reinforces the view that the Bank of Mexico will hold rates steady for some time more," said Santander economist Rafael Camarena, who expects central bank policy-makers to hike in January 2012.
The yield on Mexico's one-year interest rate swap was little changed following the data, suggesting investors had not significantly shifted their bets on the direction of monetary policy over the next year.
Policy-makers last week said the economy would likely not be strong enough to boost inflation until mid-2011.
Also easing inflation pressures, a tax hike that went into place January 2010 has been falling out of the 12-month reading this year.
CROP FAILURES
At the same time, policy-makers have said the country's inflation outlook has worsened because of domestic crop failures, high international grain prices and the possibility that the peso could weaken because of conflict in the Middle East and North Africa.
Prices for tomatoes, which are widely used in Mexican cooking, surged 18 percent in February alone following a severe cold spell that has damaged crops in the country's north. At the same time, prices for zucchini and limes fell just as sharply.
Staple corn tortillas prices jumped 2 percent during the month.
All told, consumer prices rose 0.38 percent in February after rising 0.49 percent in January, according to non-seasonally adjusted figures. The core index, which strips out some volatile food and energy prices, rose 0.40 percent during the month.
Central bank chief Agustin Carstens has said policy-makers might have to raise interest rates if the crop failures lead to higher inflation expectations. So far, there has been little sign of this. Inflation forecasts only inched higher in a poll of analysts released by the central bank on March 1.
The central bank has an inflation target of 3 percent but says it can live with readings one percentage point higher or lower.
Source: Reuters
www.reuters.com
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