The FINANCIAL — Mexican consumer prices fell more than expected in May, due to declines in electricity costs and agricultural prices that helped push the annual inflation rate below the central bank’s 3% target, according to Nasdaq.
The consumer-price index fell 0.50% in May, lowering 12-month inflation to 2.88% from 3.06% at the end of April, the national statistics agency said on June 9. The data came in below the -0.47% median estimate of 13 economists polled by The Wall Street Journal.
With inflation at historically low levels, the Bank of Mexico has kept interest rates at a record low for the past year as the economy has grown at a slow pace.
The central bank is widely expected to start raising rates when the U.S. Federal Reserve does to avoid an impact on the Mexican peso and a rise in inflation expectations.
Electricity rates were the main cause of the consumer-price decline in May, as summertime subsidies for residential users took effect in the north of the country. Energy prices fell 5%.
Prices of agricultural goods also fell 1.4% in the period. Prices of nonfood goods rose just 0.11%, showing there are no demand pressures on inflation.
Core CPI, which excludes energy and fresh fruit and vegetables, edged up 0.12% in May, in line with expectations, for an annual rate of 2.33%.
Mexico’s central bank expects the annual rate of inflation to remain around 3% and end the year below that level.
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