| | |  Business News | August 2008 
Mexico's First-Half August Inflation Exceeds Forecast
 Thomas Black - Bloomberg
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Mexico's inflation exceeded economists' forecasts in the first half of August on higher costs for electricity, eggs, university tuition and gasoline.
Consumer prices rose 0.31 percent in the month's first 15 days, the central bank said, exceeding a median estimate of 0.26 percent from 18 analysts surveyed by Bloomberg.
Today's data may add pressure on Mexico's central bank to raise rates for a fourth straight month when policy makers meet on Sept. 19. The bank must reinforce its credibility on beating back inflation, said Beat Siegenthaler, chief emerging-markets strategist in London at TD Securities Ltd.
``It would be good for them to hike at least one more time to show their dedication and commitment to the inflation target,'' Siegenthaler said.
Mexico's central bank raised its benchmark interest rate last week for a third straight month. The key lending rate is at 8.25 percent, compared with 7.50 percent in May.
The peso was unchanged at 10.0935 to the dollar at 11:05 a.m. New York time. Mexico's currency has gained 8 percent this year on the widening spread between Mexico's and the Federal Reserve's lending rates.
Core inflation, which adjusts for fresh food and other more volatile prices, was 0.23 percent in the first half of August, higher than a forecast of 0.21 percent.
Banco de Mexico, like central banks in most countries, has struggled to keep inflation in check amid rising prices for energy, food and commodities, Siegenthaler said. The bank targets annual inflation of 3 percent, a goal it doesn't expect to reach until 2010.
With the consumer price increases in the first half of August, the annual inflation rate accelerated to 5.53 percent, according to data compiled by Bloomberg. July's annual rate of 5.39 percent was the highest level since November 2004. Annual inflation in the U.S. accelerated to 5.6 percent in July, the highest since January 1991.
To contact the reporter on this story: Thomas Black in Monterrey, Mexico, at tblack(at)bloomberg.net. |
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