Mexico’s headline inflation rate likely accelerated again in July to reach its highest level in more than a year, while the core index is forecast to continue to moderate, a Reuters poll showed on Tuesday.Increasing prices in July would likely make it more difficult for the Mexican central bank to cut its key interest rate in its decision later this week.
The median estimate of 16 analysts forecast an annual headline inflation rate in July of 5.57% (MXCPIA=ECI), opens new tab, its highest level in more than a year and its fifth consecutive month of ticking up.
The poll showed that annual core inflation, which eliminates volatile energy and food prices, likely fell in July for the eighteenth consecutive month to settle at 4.02%, its lowest level since February 2021.
At the end of June, the central bank decided to hold its benchmark interest rate steady, after lowering it in March for the first time since it began its restrictive cycle in mid-2021. At the time, however, the bank noted that slowing inflation could pave the way for cuts.Since then, headline inflation has shown upward pressures even as core inflation approaches the monetary authority’s target range of 3%, plus or minus one percentage point.
The monthly rise in consumer prices for July was seen at 1.02%, compared to the previous month, while core inflation was expected to increase by 0.29%, according to the survey.
National statistics institute INEGI will release July inflation data on Thursday, and later in the day the central bank is scheduled to make its monetary policy announcement.
