- Annual inflation remains below central bank’s 3 percent target
- Banxico kept key rate at 4.25% this month after peso rebounded
Mexico’s consumer prices rose less than expected in early August, keeping the annual inflation rate below the central bank’s target.
Prices rose 0.31 percent in the first two weeks of the month, the national statistics institute said on its website Wednesday. The median forecast of 22 analysts surveyed by Bloomberg was for a 0.35 percent increase. From a year earlier, prices increased 2.80 percent, compared with 2.59 percent at the end of July. Banco de Mexico targets inflation of 3 percent.
Mexico’s central bank has raised its benchmark interest rate by one percentage point this year to prevent a weak peso from spurring inflation. It kept the key rate unchanged at 4.25 percent earlier this month after the currency recovered from record lows triggered by the U.K.’s vote to leave the European Union, and as economic growth slows and inflation remains below target.
The Finance Ministry cut its 2016 growth forecast on Monday for a second time this year, saying gross domestic product will rise 2 percent to 2.6 percent, down from a previous estimate of 2.2 percent to 3.2 percent.
The peso rose 0.2 percent to 18.5349 per dollar at 8:03 a.m. in Mexico City. Despite its recovery from the Brexit vote, the currency was still the worst performer among major currencies tracked by Bloomberg after the British pound, weakening 7.3 percent this year through Tuesday.
Core prices, which exclude energy and farm costs, increased 0.13 percent in the first half of August, compared with the 0.16 percent median forecast of analysts surveyed by Bloomberg.