Bank of Mexico's Carstens: Inflation to Top 4% Anthony Harrup - WSJ.com
go to original January 10, 2014

Mexico’s inflation is bound to move above 4% in coming months as a result of new taxes on some consumer goods, but the effect should be temporary, Bank of Mexico Governor Agustin Carstens said Friday.

Inflation measured by the consumer price index rose sharply in December to end last year at 3.97%, at the top end of the central bank’s 2% to 4% target range. Higher energy and transport costs, as well as price increases for some agricultural products, were the main causes of the spike.

New taxes on soft drinks, junk food and carbon-based fuels that went into effect Jan. 1 will push the annual rate even higher in the months ahead, although the effect will diminish over time, Mr. Carstens said at a conference. “What’s important is that inflation expectations for 2015 haven’t changed.”

The central bank estimates that the tax measures will add 0.4 percentage point to inflation this year, and Mr. Carstens said it’s very unlikely inflation will meet the bank’s 3% target this year.

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