Mexico Inflation to Remain Above Target in 2014, Carstens Says

Mexico central bank Governor Agustin Carstens said 2014 inflation (MXCPYOY) will remain above target next year after Congress approved higher taxes on junk food and soda.

Mexico’s inflation rate will accelerate to about 3.5 percent next year, above the 3 percent target first set by the central bank in 2003, Carstens told reporters today in Mexico City. The central bank had forecast inflation “near 3 percent” by the end of next year in its Aug. 7 quarterly inflation report. The bank publishes its third-quarter report tomorrow.

Inflation has slowed in each of the past five months to 3.39 percent in September after increases in farm prices eased. Mexico’s Congress approved a new 8 percent levy on junk food and a 1 peso-per-liter duty on sugary drinks. The same day, Congress passed a 1.5 percent deficit as part of the revenue portion of next year’s budget.

“The reform, the revenue law approved in the Senate will have a relatively small and temporary impact on inflation,” Carstens said. “There will be fluctuations, but they won’t generate an overflow of inflation.”

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net

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