Mexico’s Inflation Slows in July as Banxico Remains Cautious

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Or sign-in if you have an account.rtg9vrfcnyh87sr}aqjxmvd]_media_dl_1.png Mexico's national statistics age(Bloomberg) — Mexico’s annual inflation slowed in line with expectations last month, coming as central bankers have signaled that interest rates are likely to remain on hold for sometime going forward in the face of global and domestic risks.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountConsumer price increases eased to 3.12% in July compared with the same month last year, the national statics institute reported Friday. The reading was consistent with the median estimate of analysts surveyed by Bloomberg, down from 3.37% in June.Core inflation, which excludes volatile food and fuel prices and is closely watched by the central bank, slowed to 3.95% from a year ago, in line with the 3.94% median estimate and under June’s 4.03% print. The central bank targets 3% inflation, plus or minus one percentage point.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try againThe products that drove inflation up in July were onions, housing, and small restaurants. Prices for tomatoes, household gas decreased.Mexico’s central bank kept borrowing costs unchanged at 6.50% on Thursday for a second straight meeting, despite the recent decelerating in inflation, a sign of caution due to persistent price pressures.Thursday’s decision was widely anticipated, as policymakers had stated during their previous two monetary policy meetings that the two-year easing cycle was over. Banxico, as the bank is known, said on Thursday that looking ahead it would be appropriate to maintain the rate at the current level.The bank, which also kept the key rate unchanged in June, has been warning about the possible effect on prices of the prolonged war in the Middle East, especially in the energy sector. In its Thursday statement, Banxico revised its forecast for when it expects inflation to reach its target to the fourth quarter of 2027. It previously saw that happening in next year’s second quarter. Board members have also warned about services inflation, which remained stubbornly outside the bank’s target range at 4.36% in July. “The inflation slowdown is a good news, but it was driven by the non-core component; core inflation is decelerating, but at a very slow pace — particularly in the services sector, which has now seen inflation above 4% for 56 consecutive months,” said Gabriela Siller, director of economic analysis at Banco Base.During the easing period, Banxico had expressed concern about the slowdown in economic growth. In the second quarter, however, the economy rebounded after exports rose to a record despite prolonged trade tensions with the US.Gross domestic product grew 1.5% in the second quarter compared to the prior three months, according to preliminary data published by the national statistics institute last week. The print follows the 0.6% contraction registered in the previous quarter.This advertisement has not loaded yet.This advertisement has not loaded yet, but your article continues below.From a year ago, second-quarter GDP rose 2.2%, up from the revised year-on-year 0.1% growth in the three months through March.Analysts in the most recent Citi survey cut their inflation forecast for the end of the year to 4.02% from 4.09% and raised their GDP forecast to 1.20% from 1.10%.Siller added that upside risks to inflation remain in the medium and long term. “With Banxico’s monetary policy in neutral territory, the goal of reaching the 3% target will continue to be pushed further and further into the future.”—With assistance from Rafael Gayol.(Updates with inflation details and an analyst’s comment throughout.)Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. 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