Mexican consumer prices rose more than expected in July, pushing the annual inflation rate above the upper limit of the central bank’s target range.
Prices increased 0.28 percent from a month earlier, the national statistics institute said on its website today, compared with the 0.25 percent median forecast of 21 economists surveyed by Bloomberg. The annual inflation rate climbed to 4.07 percent, the highest since February.
Banco de Mexico targets inflation of 3 percent, plus or minus one percentage point. The central bank, led by Governor Agustin Carstens, left borrowing costs unchanged at a record-low 3 percent last month, saying the economy showed signs of picking up in the second quarter without pressuring inflation.
Policy makers unexpectedly cut the benchmark rate half a point in June to bolster growth that missed economists’ forecasts in seven of the past eight quarters.
“We don’t think there’s any further space for the central bank to engage in additional cuts,” Gabriel Lozano, chief Mexico economist at JPMorgan Chase & Co., said by phone from Mexico City.
“As long as there are no demand-side pressures on prices, the central bank will remain relatively calm.”
The peso was little changed at 13.2410 per U.S. dollar at 8:05 a.m. in Mexico City. The yield on inflation-linked bonds due in June 2016 fell 0.01 percentage point to 0.04 percent, according to data compiled by Bloomberg.
Inflation Forecast
Core prices, which exclude energy and farm costs, increased 0.19 percent in July from a month earlier, compared with the 0.17 percent forecast by analysts. They climbed 3.25 percent from a year earlier, while more volatile non-core prices gained 6.83 percent.
Prices for tourist packages contributed the most to the increase in costs, rising 9.8 percent, boosted by demand for summer vacations. Red tomato prices leaped 16 percent from a month earlier.
The central bank said at last month’s meeting that inflation will probably end the year below 4 percent and near 3 percent in early 2015, when the country changes the way it prices gasoline.
Banxico cut its 2014 growth forecast to between 2.3 percent and 3.3 percent in its quarterly inflation report in May from a previous estimate of 3 percent to 4 percent.
The bank is scheduled to release its second-quarter inflation report next week, and Carstens said after the June rate cut that policy makers may need to lower their 2014 expectations again because first-quarter growth was less than projected.
bloomberg.com
Prices increased 0.28 percent from a month earlier, the national statistics institute said on its website today, compared with the 0.25 percent median forecast of 21 economists surveyed by Bloomberg. The annual inflation rate climbed to 4.07 percent, the highest since February.
Banco de Mexico targets inflation of 3 percent, plus or minus one percentage point. The central bank, led by Governor Agustin Carstens, left borrowing costs unchanged at a record-low 3 percent last month, saying the economy showed signs of picking up in the second quarter without pressuring inflation.
Policy makers unexpectedly cut the benchmark rate half a point in June to bolster growth that missed economists’ forecasts in seven of the past eight quarters.
“We don’t think there’s any further space for the central bank to engage in additional cuts,” Gabriel Lozano, chief Mexico economist at JPMorgan Chase & Co., said by phone from Mexico City.
“As long as there are no demand-side pressures on prices, the central bank will remain relatively calm.”
The peso was little changed at 13.2410 per U.S. dollar at 8:05 a.m. in Mexico City. The yield on inflation-linked bonds due in June 2016 fell 0.01 percentage point to 0.04 percent, according to data compiled by Bloomberg.
Inflation Forecast
Core prices, which exclude energy and farm costs, increased 0.19 percent in July from a month earlier, compared with the 0.17 percent forecast by analysts. They climbed 3.25 percent from a year earlier, while more volatile non-core prices gained 6.83 percent.
Prices for tourist packages contributed the most to the increase in costs, rising 9.8 percent, boosted by demand for summer vacations. Red tomato prices leaped 16 percent from a month earlier.
The central bank said at last month’s meeting that inflation will probably end the year below 4 percent and near 3 percent in early 2015, when the country changes the way it prices gasoline.
Banxico cut its 2014 growth forecast to between 2.3 percent and 3.3 percent in its quarterly inflation report in May from a previous estimate of 3 percent to 4 percent.
The bank is scheduled to release its second-quarter inflation report next week, and Carstens said after the June rate cut that policy makers may need to lower their 2014 expectations again because first-quarter growth was less than projected.
bloomberg.com
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