Mexico Consumer Prices Increased Less Than Expected in Juneby and
Inflation remains below central bank’s 3 percent target
Banxico increased key interest rate to 4.25% after peso plunge
Mexico’s consumer prices rose less than expected in June, keeping the annual inflation rate below the central bank’s target.
Prices rose 0.11 percent from the month before, the national statistics institute said on its website Thursday. The median forecast of 24 analysts surveyed by Bloomberg was for a 0.16 percent increase. From a year earlier, prices increased 2.54 percent, compared with 2.60 percent in May. Banco de Mexico targets inflation of 3 percent.
Mexico raised its key interest rate more than expected last week, by a half point to 4.25 percent, after the peso plunged on the U.K.’s vote to leave the European Union, outweighing concern about the domestic economy’s weakness. While annual inflation has remained below the central bank’s target for a year, policy makers have expressed concern that the peso’s weakness will push up the cost of imports and pressure consumer prices higher.
The peso weakened 0.6 percent to 18.8504 per dollar at 11:44 a.m. in Mexico City, under-performing all other emerging market currencies tracked by Bloomberg. The currency hit a record low after the Brexit vote and was down 8.2 percent this year through Wednesday, the worst performer among major currencies tracked by Bloomberg after the British pound.
Core prices, which exclude energy and farm costs, increased 0.25 percent in June, compared with the 0.27 percent median forecast of analysts surveyed by Bloomberg.