Mexican Inflation Slows on Lower Electricity Rates Anthony Harrup - Dow Jones
go to original May 22, 2014

MEXICO CITY - Mexican inflation slowed in the first half of May, as a drop in electricity rates and lower fruit and vegetable prices helped pull down the consumer price index.

The CPI fell 0.37% in the first two weeks of the month, in line with expectations, leading the 12-month rate to ease to 3.44% from 3.5% at the end of April, the National Statistics Institute said on Thursday.

The application of summertime electricity subsidies in northern cities and lower prices for tomatoes and limes were partially offset by higher prices of gasoline and other foods.

Core CPI rose less than expected and was up 0.06% in the two-week reporting period for an annual increase of 2.97%.

In its quarterly inflation report on Wednesday, the Bank of Mexico stuck to its forecast that inflation will end the year below 4%, and move closer to its 3% target in 2015. Sluggish economic growth has helped keep inflation back, since demand hasn't been pushing prices higher.

The central bank cut its economic growth forecast for 2014, however, and now expects gross domestic product to expand between 2.3% and 3.3%, rather than the previous 3%-4%.

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