Mexico: Consumer prices increase at fastest pace in nearly nine years
May 9, 2017
Consumer prices rose 0.12% from the previous month in April, slightly above market expectations of a milder 0.02% increase but still the smallest expansion in ten months. April’s increase followed a 0.61% gain in March and mainly reflected higher prices for core goods as a result of lagging pass-through effects from the slump in the peso late last year and the surge in fuel prices. April’s headline figure, however, faced downward pressure from lower energy prices, the result of seasonal discounts on electricity tariffs.
Inflation rose to 5.8% in April from 5.4% in March, marking the highest level since May 2009. Inflation continued to move further above the 4.0% upper bound of the Central Bank’s target range, and is expected to remain there for most of the year.
The closely-watched core consumer price index—which excludes volatile categories such as fresh food and energy—rose 0.45% in April from the previous month, which was slower than the 0.57% increase seen in March. Despite the slight deceleration, a weak currency will continue to exacerbate price pressures on core goods and services in the months to come.
Author: David Ampudia, Economist