Mexican inflation continues downward trend in June
8:37 am Friday, July 07th, 2023
MEXICO CITY (Reuters) – Mexico’s annual inflation rate decelerated in June for a fifth consecutive month to 5.06%, data from statistics agency INEGI showed on Friday, continuing a downward trend spurred by a long cycle of rate hikes.
Headline inflation came in slightly above a market forecast of 5.02%, but is now at its lowest since March 2021.
Consumer prices fell 0.10% in June from May, according to non-seasonally adjusted figures, against an expected drop of 0.09%.
The closely watched core price index, which strips out some volatile food and energy prices, rose 0.30% during the month.
Annual core inflation in May, considered a better gauge of price trends because it excludes some highly volatile items, was 6.89%, forecast had predicted 6.87%.
The Bank of Mexico’s governing board said its benchmark interest rate is likely to remain on hold at 11.25% for an “extended period,” minutes from the bank’s last monetary policy meeting showed, as inflation remains “complex.”
Mexico’s central bank, also known as Banxico, unanimously held its benchmark interest rate steady at the meeting for a second time, after a nearly two-year rate-hike cycle in which it raised the rate by 725 basis points to combat inflation.
Banxico has been repeating the message that rates will need to remain on hold in order to bring inflation down to its 3% target, which most of the bank’s five board members forecast will happen in the fourth quarter of 2024.
(Reporting by Natalia Siniawski, Editing by Louise Heavens)
