Inflation in Mexico Gathers Speed Through December Anthony Harrup - The Wall Street Journal
go to original December 23, 2016

Inflation in Mexico accelerated in the first half of December, moving further from the central bank’s 3% target as a weaker peso put pressure on goods prices and tourism services rose ahead of the Christmas holiday season.

The consumer price index rose 0.42% in the first two weeks of the month, pushing the annual rate up to 3.48% from 3.31% at the end of November, the National Statistics Institute said Thursday. The core index, which excludes energy and fresh fruit and vegetables, rose 0.47% to an annual 3.46%.

The increases were above the median estimates of 0.35% and 0.30%, respectively, in a Wall Street Journal poll of economists.

Core goods prices, which reflect inflationary effects of a weaker Mexican peso, rose 0.36% and were up 3.97% from a year earlier. Services rose 0.56%, including a 33% jump in airfares and a 14% increase in tourism packages before the holidays. Overall services were up 3.03% in the 12 months through mid-December.

The Bank of Mexico stressed concerns about rising inflation and inflation expectations when it raised interest rates earlier this month, its fifth increase of the year which brought the overnight rate target to 5.75% from 3.25% at the end of 2015.

With gasoline prices expected to rise in 2017 as the government phases out price controls, and a continued impact from the weaker peso, analysts predict interest rates will move even higher next year.

Read the rest at The Wall Street Journal

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Related: Jobless Rate in Mexico Seems to Have Dropped Further in November (EconoTimes)

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