Mexico Annual Inflation Slows in October

On the eve of the next meeting of the central bank’s monetary policy committee, figures from the national statistics office on Wednesday revealed that Mexico’s inflation rate fell to 8.41 per cent in the year that ended in October.

Mexico’s inflation remains far above target despite slowing from the 8.7 per cent annual rate observed last month, and markets anticipate another 75 basis-point increase in interest rates to 10 per cent this week.

The Bank of Mexico aggressively tightened monetary policy earlier this year after 12-month inflation in Latin America’s second-largest economy blew above its objective of 3 per cent plus or minus 1 percentage point. These levels hadn’t been seen since late 2000.

Consumer prices in Mexico increased 0.57 per cent on a monthly basis in October, according to non-seasonally adjusted data from the statistics office INEGI.

“Headline inflation is probably peaking, and a gradual downtrend likely will soon emerge,” said industry expert Andres Abadia.

“But core inflation remains stubbornly sticky. This, and still-rising inflation expectations, will push Banxico to hike this week the main rate by 75 basis points”.

The core inflation index increased by 0.63 per cent in October to reach an annual rate of 8.42 per cent (excluding some volatile food and energy items). According to a recent poll of economists, the headline inflation rate would have been 8.46 per cent, while the core index would have been 8.44 per cent.

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