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Mexico consumer prices increase at fastest pace in nearly nine years

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Staff Writer | May 11, 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.
Mexico consumer prices
LatAm   Panelists surveyed by FocusEconomics
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.

In its March inflation report, the Central Bank highlighted that inflation will remain above its 3.0% target for most of the year and gradually converge to the target toward the end of 2018.

Panelists surveyed by FocusEconomics this month expect inflation to end 2017 at 5.2%, which is up 0.1 percentage points from last month’s forecast. For 2018, the panel sees year-end inflation at 3.7%.