Mexico annual inflation rate slightly increased to 7.91% in January

Mexico annual inflation rate slightly increased to 7.91% in January

MEXICO CITY (Reuters) – Mexican consumer prices rose 7.91% in the year through January, the national statistics agency said on Thursday, slightly higher than Reuters analysts had predicted with a surprise of 0.02%.

Consumer prices rose 0.68% in January, according to non-seasonally adjusted figures.

The core index, which strips out some volatile food and energy prices, rose 0.71% during the month.

Core inflation was also higher than predicted by Reuters analysts with a surprise of 0.04%.

Two weeks ahead of the results, Mexican President Andres Manuel Lopez Obrador had said, “Mexicos inflation will begin to slow down after accelerating in early January”.

Jason Tuvey, senior emerging markets economists at Capital Economics said the inflation rate set the scene for Banxico, as the Bank of Mexico is known, to raise interest rates by 25 basis points, to 10.75%, later today.

“This will mark the end of the tightening cycle, but the pick up in services inflation raises the risk that officials deliver a bit more tightening”, he says.

Gabriela Siller from Banco BASE also says, “a 25 bp raise in interest rates is expected, keeping pace with the Fed (U.S. Federal Reserve), but a 50 bp increase would not go amiss given Mexicos inflationary pressures”.