Mexican Consumer Prices Fall Less Than Forecast as Farm Costs Rise Eric Martin and Nacha Cattan - Bloomberg
go to original June 9, 2014

Mexican consumer prices fell 0.32 percent, compared with the median forecast of 18 economists surveyed by Bloomberg for a drop of 0.36 percent. The decline was still the biggest in a year. (Susana Gonzalez/Bloomberg)

Mexican consumer prices fell less than expected in May as costs for some farm products increased, the statistics agency reported, three days after the central bank unexpectedly cut interest rates.

Prices fell 0.32 percent in the month, less than the 0.36 percent median forecast of 18 economists surveyed by Bloomberg. The drop was still the biggest in a year. Annual inflation was 3.51 percent, compared with 3.50 percent in April, and remained below the 4 percent upper limit of the bank’s target range.

Annual inflation has slowed this year as growth stagnated, leading the central bank to cut its benchmark rate half a point to a record low 3 percent last week. Banco de Mexico said in its May 21 quarterly inflation report that the pace of price increases may climb back above 4 percent for some months this year before nearing the 3 percent target in early 2015.

Inflation “continues to be in line with Banxico’s outlook,” Marco Oviedo, the chief Mexico economist at Barclays Plc, said in an e-mailed response to questions. “I think Banxico shot its last bullets to boost the economy. Inflation will not get lower.”

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