October 24, 2019 / 12:37 PM / 22 days ago

Mexican economy inches forward in August, inflation tame

MEXICO CITY (Reuters) - Mexico’s economy grew by 0.1% in August from July in seasonally adjusted terms, official data showed on Thursday, continuing the sluggish performance that has so far dogged the administration of President Andres Manuel Lopez Obrador.

Figures from the national statistics agency showed that secondary activities, which include manufacturing, moved the economy forward during August, while services stagnated and the category that covers farming, fishing and mining went backwards.

Separately, consumer price data showed that annual inflation was 3.01% in the first half of October, slightly below the consensus forecast of a Reuters poll for a reading of 3.04%. Compared to the previous two-week period, prices rose 0.4%.

The central bank targets an inflation rate of 3%, with a one percentage point tolerance range above or below that figure. The latest price figures could encourage the bank’s board to make further interest rate cuts to gee up the sputtering economy.

Roiling markets at times with his policymaking, Lopez Obrador has presided over weak investment and months of economic stagnation since he took office in December vowing to reduce inequality and deliver average annual growth of 4%.

His decision to cancel a partly built $13 billion new Mexico City airport and his retreat from the previous government’s opening of the oil and gas industry to private capital in particular have fueled doubts about his economic stewardship.

In unadjusted terms, Latin America’s second-biggest economy contracted by 0.9% from August of 2018, the data showed.

Writing by Dave Graham; Editing by Chizu Nomiyama

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