UPDATE 1-Analysts hike 2012 Mexican inflation bets for 4th month

Mon Oct 1, 2012 10:57am EDT

Related Topics

* Economists see end-2012 inflation at 4.15 pct

* Raise growth forecasts for 2012, 2013

* Manufacturing PMI survey shows growth easing

By Krista Hughes

MEXICO CITY, Oct 1 (Reuters) - Analysts following Mexico's economy raised their forecast for inflation this year for the fourth month in a row, the central bank said on Monday in a monthly poll of economists, banks and brokerages.

Analysts forecast a 4.15 percent annual increase in consumer prices this year, up from a 4.01 percent rise expected in the last monthly poll and above the central bank's 4 percent target ceiling.

Annual inflation is running at its highest in more than two years at 4.73 percent due to a spike in fresh food prices, which the central bank, the Banco de Mexico, has said is temporary. It expects inflation to fall below 4 percent by the end of the year.

Inflation estimates for 2013 rose to 3.76 percent from 3.71 percent but remained within the central bank's comfort zone.

The Banco de Mexico is watching carefully for signs that current high inflation is bleeding into the wider economy and has said it will raise credit costs if this happens.

Still, investors are not pricing in a hike to Mexico's benchmark interest rate, which has been held at 4.5 percent since mid-2009, until April 2014.

The poll showed analysts raised their forecasts for growth both this year and next, tipping 3.85 percent for economic growth this year, compared to estimates in the last poll for 3.75 percent. Analysts raised their growth forecast for 2013 to 3.53 percent from 3.44 percent.

Latin America's second-largest economy grew an average 4.3 percent in annual terms in the first half of the year but growth is expected to slow in the second half, with the finance ministry predicting an expansion of 3.5-4 percent for 2012.

Finance Minister Jose Antonio Meade said it was possible growth would end up in the upper part of the range, but there was a lot of uncertainty due to the global environment.

"We feel very comfortable with the 3.5 percent which is the central element of our forecast ... and we feel it's very feasible that it could turn out a little higher," he told reporters.

Despite the optimism, exports to the United States are no longer growing strongly and a key gauge of manufacturing activity eased in September.

The HSBC Mexico Manufacturing Purchasing Managers' Index (PMI) dipped to 54.4 from 55.1 in August, after adjusting for seasonal variation.

The survey also showed the impact of rising inflation: input prices rose to 58.95, the highest since June, and manufacturers put up their own prices as well.

Separate data showed remittances sent back by Mexicans living abroad rose month-on-month in August but were 11.6 percent slower than the same time last year.

The fall, to a monthly total of $1.9 billion, reflects weakness in U.S. construction activity, which employs many of the estimated 11 million Mexicans living in the United States.

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