Inflation in Mexico slows less than expected in May

(Bloomberg) – Mexico’s annualized inflation slowed slightly in May, although it remained well above the central bank’s target ceiling.

Consumer prices rose 5.89% in May compared to the previous year, compared to 6.08% in April, the National Institute of Statistics and Geography (INEGI) reported on Wednesday. The figure, which was driven by fuel prices, was above the median of the estimates of economists consulted by Bloomberg, of 5.86%.

Economists have said the figure is especially high due, in part, to a comparison with the sharp drop in prices last year, when the pandemic raged and oil prices plummeted.

The underlying price index, which excludes volatile elements such as fuel, rose 0.53% compared to the previous month, beating the median of expectations of 0.48%. In annualized terms, prices registered an increase of 4.37%.

The central bank’s inflation target is 3%, plus or minus 1 percentage point.

Key information

Mexico’s central bank, known as Banxico, voted unanimously to keep the key interest rate at a nearly 5-year low of 4% in May. President Andrés Manuel López Obrador has said he wants inflation to be kept under control. to prevent consumers from being hurt by price increases. Mexico has cut interest rates 12 times since August 2019, by a total of 4.25 percentage points to 4%. Banxico said last week that it expects the inflation remains above target until early 2022, when short-term pressures ease.

Original Note: Mexico Inflation Slows Less Than Forecast, Testing Banxico (1)

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