* December inflation 3.57 percent vs poll 3.71 percent
* First time below central bank ceiling since May
* Backs forecast for no interest rate change
By Alexandra Alper
MEXICO CITY, Jan 9 Mexican consumer prices
dipped below the central bank's 4 percent tolerance ceiling last
month for the first time in seven months, further diminishing
chances of an interest rate rise any time soon.
Mexican consumer prices rose 3.57 percent in
the year through December, the national statistics agency said
on Wednesday, slower than November's 4.18 percent and below
expectations of 3.71 percent in a Reuters poll. December's
figure is the lowest since April.
Consumer prices picked up 0.23 percent last
month, down sharply from the 0.68 percent rate reported in
November and below the 0.34 percent expected in a Reuters poll.
Although inflation had overshot the central bank's 4 percent
ceiling for six months, a welcome retreat from a 2-1/2 year high
reached in September had prompted the Banco de Mexico (Banxico)
to row back on threats to raise interest rates "soon."
"Inflation is back at target, growth is not going to be
particularly fast at least in the very near term, so interest
rates are probably on hold for the time being," said David Rees,
an economist at Capital Economics in London, who described the
annual rate's quick descent as "good news."
The majority of Banco de Mexico members said at their
December meeting they expected inflation to end the year below 4
percent, and investors and economists believe interest rates
will be held at 4.5 percent until mid-2014.
Inflation had been pushed upward by fresh food prices as the
cost of eggs and chicken rose following an outbreak of avian flu
in western Mexico and bad weather damaged crops.
Data showed a 0.56 percent rise in fruit and vegetable
prices in December following two months of drops, and some
economists are making gloomier forecasts for near-term
December's annual inflation rate is "a good number, but
remember that the goal is 3 percent," said Pedro Tuesta, an
economist at 4Cast in Washington D.C., referring to the central
bank's inflation target.
Tuesta said he expects inflation to rise in the first half
of the year due to the statistical effect of relatively low
inflation rates in early 2012, as well as higher gasoline
The Ministry of Finance under new President Enrique Pena
Nieto has projected a $1.3 billion gasoline subsidy for 2013,
which could signal a fuel price rise, analysts say.
The core price index, which strips out some
volatile food and energy prices, rose 0.12 percent in December,
compared with an expected 0.23 percent increase and a 0.05
percent rise in November.
Annual inflation in services, a key gauge of home-grown
price pressures, decelerated to 1.15 percent and non-food core
goods inflation, the most sensitive to currency fluctuations,
picked up slightly to 4.13 percent.