Mexican Inflation Keeps a Step Ahead WSJ.com
go to original January 7, 2014

Mexico’s inflation held stubbornly above the central bank’s 3% target in 2013, but the Bank of Mexico still managed to squeeze in three interest rate cuts to lower borrowing costs in a sluggish economy.

Thursday’s inflation report from the National Statistics Institute is expected to show the consumer price index up 0.53% in December, according to the median estimate of 10 economists polled by the Wall Street Journal, pushing the annual rate up to 3.93% from 3.62% at the end of November.

Contributing to the expected acceleration was a 67% rise in Mexico City subway fares, as well as seasonal increases in tourism costs over the holiday period, and the monthly rise in government-set gasoline prices.

The Bank of Mexico lowered its overnight lending rate target by a half percentage point in March, and by a quarter percentage point in both September and October, bringing it to 3.5%. The October cut was the last one for the foreseeable future, the bank said, as the board decided to watch for any inflationary fallout from this year’s tax increases.

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