Mexico CPI Rises More Than Expected as Subway Fares Increase

Mexican consumer prices rose more than expected in early December after the nation’s capital raised subway fares and prices for farm products climbed.

Prices jumped 0.40 percent in the first two weeks of the month, the national statistics agency said, compared with the 0.37 percent median forecast in a Bloomberg survey. Annual inflation (MXCPYOY) quickened to 3.86 percent from 3.62 percent in November, remaining below the 4 percent upper limit of the central bank’s target range. Core prices, which exclude energy and farm costs, increased 0.30 percent, more than the 0.25 percent median projection.

Latin America’s second-largest economy is expected to strengthen gradually next year, Banco de Mexico said in the minutes to its Dec. 6 monetary policy decision, when it kept interest rates on hold. Consumer prices had risen in November by the most in two years as electricity costs surged and after the central bank cut rates by a quarter point at its September and October meetings to boost a slowing economy.

The peso gained 0.1 percent to 12.9624 per dollar at 8:06 a.m. in Mexico City.

Annual inflation will be about 3.5 percent throughout 2014 before easing to near the central bank’s 3 percent target in 2015, most policy makers said in the minutes released Dec. 20.

To contact the reporters on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net; Eric Martin in Mexico City at emartin21@bloomberg.net

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

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