UPDATE 2-Mexico inflation hits fastest pace in 8 months in early Jan

Thu Jan 23, 2014 10:18am EST

Related Topics

MEXICO CITY, Jan 23 (Reuters) - Mexican annual inflation
rose in early January at its fastest pace since May due to an
uptick in soda and gasoline prices after a fiscal reform, but
the central bank has said it expects the spike to be temporary. 
    Inflation for the 12 months through the first half of
January rose to 4.63 percent, the national statistics office
said on Thursday, just above expectations for a 4.61 percent
rise in a Reuters poll.
    The figure was also up from the 3.86 percent rate in the
first half of December and the 3.97 percent rate for the full
month. 
   January's figure marked the first time annual inflation
through the initial half of a month strayed above the central
bank's 4 percent limit since June, as the finance ministry rolls
back fuel subsidies and a fiscal reform approved last year
raised prices on soft drinks and junk food.
 
  
    Mexico's central bank sees inflation finishing the year at
3.5 percent before trending down to 3 percent in 2015, and is
expected to keep interest rates on hold through 2015.
    A poll by Banamex released earlier this week showed a
consensus among analysts that the central bank will keep rates
steady until March, 2015, when they predict a 25 basis point
hike.
    Central bank governor Agustin Carstens earlier this month
forecast inflation would rise above the tolerance ceiling in the
coming months, but said the uptick would be temporary and
wouldn't cause the bank to shift its monetary policy.
  
    Consumer prices rose 0.68 percent in the first
half of the month as soda and gasoline prices jumped. The figure
was just shy of expectations for a 0.69 percent rise but above a
0.4 percent rise in the first half of December.
    Core consumer prices, which exclude some
volatile food and energy prices, rose 0.69 percent, its fastest
pace since 2000. 
    The figure was above the 0.64 percent rise expected by
analysts and the 0.3 percent rise notched in early December.
    Mexico's central bank kept its interest rate on hold at a
record low of 3.5 percent last month after cutting in September
and October to counter a deep economic slowdown. 
    Growth rebounded in the third quarter but minutes released
last month showed central bankers still see risks to growth
despite a raft of reforms being pushed through Congress by
President Enrique Pena Nieto aimed at boosting the economy.
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.