Mexico Sees ‘Favorable’ CPI Even as Commodities Gain
Mexican central bank Governor Agustin Carstens said increases in world commodities won’t stop global inflation from being “favorable,” which will help slow price increases in Mexico this year.
Food prices rose to a record in December on higher sugar, grain and oilseed costs, the United Nations said Jan. 5. Oil surged to its highest year-end price in three years at the end of 2010, settling above $91 a barrel.
“This could generate some inflation pressure in the short term,” Carstens said at a conference in Mexico City today. “It won’t be important enough to keep the benign global inflation scenario from continuing.”
Weak global growth amid concern over Europe’s debt crisis will help keep inflation low despite the commodity price increases, Carstens said. That will help Mexico’s inflation rate to slow to within its target range of 2 percent to 4 percent this year, he said.
Banco de Mexico predicts annual inflation will be 3.75 percent to 4.25 percent in the first quarter of 2011 and 3 percent to 4 percent in the second quarter. Inflation will be 2 percent to 4 percent from the third quarter on, the bank says.
Mexico’s consumer prices rose more than economists expected last month, led by higher prices for air travel and perishable foods, the central bank said today.
December Inflation
Prices rose 0.5 percent in December from a month earlier, the central bank said, beating the median estimate for a 0.39 percent rise in a Bloomberg survey of 15 analysts. Prices rose 4.4 percent from a year earlier, the fastest annual pace since March.
Globally, an index of 55 food commodities tracked by the Food and Agriculture Organization gained for a sixth month in December to 214.7 points, above the previous all-time high of 213.5 in June 2008, the Rome-based UN agency said in a monthly report. The gauges for sugar and meat prices advanced to records.
Carstens also said that Mexico’s output gap, the difference between the economy’s current growth and its potential growth, will close more quickly this year.
Finance Minister Ernesto Cordero said at the same event that the economy will probably grow around 4 percent this year.
Export growth is helping Mexico’s economy rebound from a 6.1 percent contraction in 2009. Gross domestic product expanded 5.3 percent in the third quarter from a year earlier.
JPMorgan Chase & Co. on Dec. 29 raised its forecast for Mexico’s economic growth in 2011 to 4.5 percent from 3.5 percent, citing an increase in its forecast for U.S. growth after income tax cuts were extended. The U.S. buys about 80 percent of Mexico’s exports.
To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net
To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net
Rate this Page