© Reuters. FILE PHOTO: Customers walk past vegetables on a makeshift stall in a market in Mexico City, Mexico April 8, 2022. REUTERS/Luis Cortes
MEXICO CITY (Reuters) -Mexico’s annual inflation slowed in March by more than expected to 6.85%, the lowest rate in nearly 1-1/2 years, although core price pressures remained elevated, data from national statistics agency INEGI showed on Wednesday.
The March reading was the lowest since October 2021, and came in slightly below the consensus forecast of 6.90%, as determined by a Reuters poll.
February’s inflation rate stood at 7.62%.
Still, core inflation, which strips out volatile food and energy prices, slowed to 8.09% from 8.29% the previous month.
“Core inflation was impacted by the high readings in services, driven by the seasonal increase in airfares and tourism packages, and food services,” Goldman Sachs (NYSE:) economist Alberto Ramos wrote in a research note.
Easing inflation for processed food prices also marked a positive sign, Bank of Mexico Deputy Governor Jonathan Heath wrote Wednesday on Twitter, but the category remains the “most concerning” given an annual rate of 12.69% and the impact of processed food prices on household spending.
Heath also expressed concern about rising inflation for “other services,” a core inflation category that includes a broad range of services like medical consultations and car repair and which reached a peak annual rate of 7.73% in March.
Month-on-month, Mexico’s headline consumer price index rose by 0.27% in March, just under the 0.31% forecast in a Reuters poll.
The latest data came hours before heads of state from 11 Latin American and Caribbean countries met virtually to discuss a regional anti-inflation roadmap.
The participating leaders, including the presidents of Mexico, Chile, Argentina, Brazil and Colombia, agreed to outline new measures to fight rising prices and facilitate regional trade, Mexico’s government said Wednesday, adding that a high-level anti-inflation summit was agreed to be held in Mexico May 6-7.
Last week, Mexico’s central bank hiked its key interest rate to 11.25%, but moderating the pace of its tightening cycle.
Banxico has raised rates by 725 basis points since its rate-hiking cycle started in June 2021 to combat inflation.
