Mexico: Inflation falls to six-month low in July
August 8, 2013
In July, consumer prices dropped 0.03% over the previous month. The reading was virtually unchanged from the 0.06% decline observed in June and undershot market expectations of a 0.02% increase. The reading mainly reflects lower non-core prices, particularly for agricultural products.
As a result of the subdued result, annual headline inflation dropped from 4.1% in June to 3.5% in July, which represents the lowest level in six months. Annual core inflation dropped from 2.8% in June to 2.5% in July.
In its inflation report from August, the Central Bank indicated that it expects inflation to end close to 3.5% this year, (previous estimate: between 3.0% and 4.0%). For 2014, the Bank maintained its projection, which has inflation moderating to levels close to its long-term inflation target of 3.0%. LatinFocus Consensus Forecast panellists expect inflation to end the year at 3.7%, which is unchanged from last month's forecast. For next year, the panel sees year-end inflation also at 3.6%.
Author: Ricardo Aceves, Senior Economist