Mexico: Inflation falls to six-month low in April
May 8, 2014
In April, consumer prices fell 0.19% over the previous month. The reading contrasted the 0.27% increase reported in March and exceeded the 0.14% decrease that market analysts had expected. According to the National Statistics Institute (INEGI), lower non-core prices, particularly for fruits and vegetables, as well as for energy, were the main drivers behind the monthly drop.
Annual headline inflation fell from 3.8% in March to 3.5% in April, which marked the lowest level since October 2013. Inflation remained within the Central Bank's inflation target of 3.0% with a 1.0% tolerance margin.
Core consumer prices, which do not take into account prices for fresh food, fuels and regulated prices, added 0.29% over the previous month (March: +0.21% month-on-month), pushing annual core inflation to 3.1% in April, up from 2.9% in March.
The Central Bank (Banxico) expects that by the end of 2014, inflation will close the year below its 4.0% target ceiling. For 2015, Banxico expects inflation to end slightly above its 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