Mexico: Inflation drops in February
March 7, 2014
In February, consumer prices rose 0.25% over the previous month, which came in below the 0.89% increase registered in January. February's increase was roughly in line with the 0.22% rise the market had expected and mainly reflected that lower prices for agricultural products offset higher prices for energy. Annual headline inflation dropped from 4.5% in January to 4.2% in February. The result confirmed analysts' expectations that the tax-related increase in inflation observed in January had been a one-time event. Nevertheless, inflation remains above the Central Bank's inflation target of 3.0% with a 1.0% tolerance margin. Core consumer prices-which exclude prices for fresh food, fuels and regulated prices-increased 0.28% over the previous month (January: +0.85% month-on-month). Annual core inflation eased from 3.2% in January to 3.0% in February. The Central Bank indicated that it expects inflation to end 2014 near 3.5% and will thus stay above the long-term inflation target of 3.0%. LatinFocus Consensus Forecast panelists expect inflation to end 2014 at 3.8%, which is up 0.1 percentage points over last month's forecast. For 2015, the panel sees year-end inflation at 3.4%.
Author: Ricardo Aceves, Senior Economist