Mexico early-August prices up 0.42%, rate hikes likely to continue
2022.08.24 14:50
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FILE PHOTO: A vendor chats with a customer at a stall in an outdoor market in Mexico City, Mexico January 23, 2022. REUTERS/Luis Cortes/File Photo
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MEXICO CITY (Reuters) – Mexican consumer prices rose 0.42% during the first half of August, pushing annual headline inflation to 8.62%, both slightly ahead of market expectations, data from the national INEGI statistics agency showed on Wednesday.
The closely watched core price index, which strips out some volatile food and energy prices, climbed 0.49% in early August. Annual core inflation stood at 7.97%.
The latest consumer price inflation numbers likely reinforce bets that Banxico, as the Bank of Mexico is known, will again hike its benchmark interest rate in September.
The Mexican central bank targets inflation of 3%, plus or minus one percentage point.
Analysts polled by Reuters had forecast annual headline inflation to climb to 8.52% during the first half of the month, on the back of an expected 0.35% increase in the period.
Banxico hiked its benchmark interest rate by three-quarters of a percentage point to a record 8.5% at its August meeting, mirroring the U.S. Federal Reserve’s most recent policy decision as Mexican inflation surged to an over two-decade high.
The board of Banxico has voted to hike rates by a total of 450 basis points over the last 10 monetary policy meetings as the monetary authority struggles to bring inflation to target.
Considering the core index, INEGI said, prices of goods rose 0.72% and services were up 0.22% during the first half of August.
Within the non-core index, it added, prices of agricultural products increased 0.45% while those of energy and government-authorized tariffs rose 0.03%.
