- Annual inflation rate of 2.87% remains below central bank goal
- Banxico lifted key rate last month after peso’s drop to record
Mexico’s consumer prices rose less than expected in February, keeping the annual inflation rate below the central bank’s goal.
Prices increased 0.44 percent from a month earlier, the national statistics institute said on its website Wednesday. The median forecast of 22 analysts surveyed by Bloomberg was for an increase of 0.49 percent. From a year earlier, prices rose 2.87 percent, compared with 2.61 percent in January. Banco de Mexico targets inflation of 3 percent.
Mexico last month surprised investors with moves aimed at stemming a rout in the peso, shoring up the public budget and preventing inflation from taking hold in Latin America’s second-largest economy. In a rare coordinated announcement, the central bank raised borrowing costs 0.5 percentage point to 3.75 percent, and the Finance Ministry announced spending cuts. The central bank also replaced its daily dollar-auction program with a plan to sell greenbacks directly to banks whenever needed to support the currency.
Inflation slowed last year to the lowest levels since the late 1960s after the government ended monthly gasoline price increases and did away with long-distance phone connection fees, outweighing the impact of the weaker currency on import prices.
The peso slid 14 percent last year, the most since 2008. The currency declined another 4 percent this year through Tuesday, the worst performance among 16 major currencies tracked by Bloomberg.
The peso gained 0.7 percent to 17.8090 per U.S. dollar at 8:08 a.m. in Mexico City.
Core prices, which exclude energy and farm costs, increased 0.36 percent from the previous month, compared with the 0.35 percent median forecast of analysts surveyed by Bloomberg.