Mexico annual inflation eases lower than forecast in July By Reuters

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© Reuters. FILE PHOTO: A man is reflected in a window in a shoe store in downtown Mexico City on November 21, 2014. REUTERS / Carlos Jasso / File Photo

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MEXICO CITY (Reuters) – Mexico’s annual inflation slowed to its lowest level in four months in July, but slightly exceeded expectations of staying well above the central bank’s target rate, data from national statistics agency INEGI showed on Monday.

Consumer prices rose 5.81% in the year through July, the lowest rate since March, INEGI figures showed. The data compared to the consensus forecast of a Reuters poll for a value of 5.77%. In June inflation was 5.88%.

The central bank, which will hold its next policy meeting on Thursday, is targeting an inflation rate of 3%, with a margin of tolerance of one percentage point above and below.

Expectations are growing that the bank could hike its key interest rate for the second year in a row to cope with price pressures in Latin America’s No. 2 economy.

INEGI data showed that the annual core inflation index, excluding some volatile elements, accelerated to 4.66%, its highest rate since late 2017. This figure was in line with Reuters poll results.

Compared to the previous month, consumer prices rose 0.59% in July, while the core price index rose 0.48% from June, the data showed.

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