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Mexico Forecast Calls for Inflation
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April 01, 2010
Mexico City – Mexico’s rate of inflation will continue to rise in the next few months, driven by an increase in tax rates and the price of petroleum, according to a review of this year’s economic situation by leading financial specialists.
Economists from financial groups Santander, Ixe and Ivex on Wednesday said that rising inflation throughout 2010 is likely to affect other sectors of production, including agriculture and transportation. They noted the Mexican government’s 2009 policy to freeze the price of fuel resulted in zero inflation for that year. Any inflation increases for petroleum, therefore, are the result of increases in gas prices likely to take place throughout the rest of 2010, they said.
The specialists added that price increases reported by the agriculture sector in the past three months, particularly in the first two weeks of March, are due to the so-called “pico de gallo” effect, or substantial increases in the prices of tomatoes and onions, two of the main ingredients in the spicy condiment.
Inflation is expected to tick up to 5.44 percent by the close of 2010, which will likely prompt Mexico’s central bank (Banxico) to raise its short-term interest rates in the second half of the year to control such growth.
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