Inflation in Mexico continues to decelerate in first half of September

Mexico’s headline inflation eased in the first half of September, official data showed on Friday, slightly below market expectations and fueling expectations that the Bank of Mexico (BANIXICO) will keep the key interest rate at its record level.

Headline inflation in Latin America’s second-largest economy reached 4.44% in the 12 months to early September, up from 4.64% at the end of August, data from the National Institute of Statistics and Geography (INEGI) showed.

The latter figure, lower than the median forecast of 13 analysts polled by Reuters but still above the central bank’s target, is likely to reinforce bets that the Bank of Mexico will hold its key interest rate steady at a record high of 11.25% for longer.

The Bank of Mexico last month opted to keep its benchmark interest rate at that level for the third consecutive time, warning that it would need to stay that way for an “extended” period to meet its 3% inflation target.

Underlying inflation in Mexico, considered a better parameter to measure the trajectory of prices because it eliminates highly volatile products such as food and energy, reached 5.78% in the year to the first half of September, Inegi said, slightly above the 5.76% expected by economists.

In the six-month period, Inegi added, general prices rose by 5.78% in the first half of September, slightly above the 5.76% expected by economists.

TYT Newsroom