Mexico Consumer Prices Declined More Than Forecast in Aprilby
Inflation remains below central bank's 3 percent target
Banxico kept key rate steady last week after peso rebounded
Mexico’s consumer prices dropped more than forecast in April as electricity and food prices tumbled, keeping the annual inflation rate below the central bank’s target.
Prices decreased 0.32 percent from a month earlier, the national statistics institute said on its website Monday. The median forecast of 20 analysts surveyed by Bloomberg was for a decline of 0.25 percent. From a year earlier, prices rose 2.54 percent, compared with 2.6 percent in March. Banco de Mexico targets inflation of 3 percent.
The central bank last week left the overnight rate on hold at 3.75 percent, balancing the risk for a renewed drop in the peso against the prospect of U.S. rates remaining on hold. While policy makers said that the risks to global growth have increased and that monetary stimulus in some developed nations raises the chances for instability in the international financial system, the risks for inflation and growth in Mexico were unchanged since their last decision in March.
Policy makers last week said they expect inflation to average around 3 percent this year and remain near that level in 2017. A deterioration in international conditions could cause a further peso decline and spur inflation, they said in the statement accompanying the rate decision. Inflation in December slowed to the lowest level since the late 1960s.
The country’s currency has gained 4.7 percent against the dollar since Feb. 17, when in a rare coordinated move the central bank raised the key rate between scheduled decisions and the Finance Ministry announced spending cuts. The actions have been "quite successful" in stabilizing the peso, central bank Governor Agustin Carstens said in an interview last month.
The peso fell 0.9 percent to 18.0347 per dollar at 8:06 a.m. in Mexico City.
Core prices, which exclude energy and farm costs, increased 0.22 percent in April, compared with the 0.19 percent median forecast of analysts surveyed by Bloomberg.