Mexican Inflation Rate Slowed to Second-Lowest in Five Years

Mexican consumer prices rose less than economists expected in September, pushing the annual rate of inflation to its second-lowest level in five years.

Consumer prices rose 0.25 percent in September from the previous month, below expectations for a 0.29 percent increase according to the median estimate of 19 analysts in a Bloomberg survey. Prices rose 3.14 percent from a year ago, the national statistics agency said today on its website.

Mexicans paid 0.6 percent more for electricity and 0.94 percent extra for gasoline last month, while prices for fruit and vegetables declined 1.5 percent, the report showed. Core inflation, excluding items such as energy and food, rose 0.27 percent, the agency said.

“We don’t think inflation will be a relevant topic in the short term,” Julian Cubero Calvo, a BBVA Bancomer SA economist in Mexico City, said in a telephone interview before the report. Cubero’s 0.20 percent forecast for monthly inflation was the lowest of the 19 estimates. Education costs jumped 2 percent last month as students returned to classes.

The September result was the lowest since a 3.04 percent reading in March and the second-lowest since July, 2006. Mexico’s central bank targets inflation of 3 percent plus or minus a percentage point.

Economists surveyed by Citigroup Inc.’s Banamex unit have tempered their inflation forecasts in recent weeks. In the most recent bi-weekly survey published Oct. 4, economists saw inflation ending this year at 3.4 percent, compared with 3.43 percent on Sept. 20, and 3.5 percent on Sept. 6.

Growth

“The balance of risks in Mexico still calls for a relatively neutral monetary policy, which is precisely where we stand today,” central bank Governor Agustin Carstens said at the Bloomberg Markets 50 Summit in New York on Sept. 15. “There may be circumstances in the future that call for lower rates.”

Mexico’s economy grew 3.74 percent in July from a year earlier. Mexico’s economic growth is slowing this year from 5.4 percent in 2010 as a global economic slowdown reduces sales to the U.S., the market for 80 percent of the country’s exports.

The central bank, which on Aug. 10 cut this year’s forecast for growth to between 3.8 percent and 4.8 percent from between 4 percent and 5 percent, said Aug. 26 it would consider cutting interest rates if the economic outlook worsened.

The central bank’s five-member board next meets on Oct. 14.

To contact the reporter on this story: Jose Enrique Arrioja in Mexico City at jarrioja@bloomberg.net

To contact the editor responsible for this story: Richard Jarvie at rjarvie@bloomberg.net