MEXICO CITY (Reuters) -Mexico’s headline inflation rose more than expected in the first half of May, data from the national statistics agency showed on Thursday, jumping outside the central bank’s target range for the first time this year.
Consumer prices rose 0.09% in the first 15 days of the month from the previous half-month period, bringing the annual rate through the month’s first half to 4.22%.
Analysts polled by Reuters had forecast an annual rate of 4.01%.
The Bank of Mexico, which targets an inflation rate of 3%, plus or minus one percentage point, cut its benchmark interest rate by 50 basis points last week — its third straight cut of that magnitude — bringing it to 8.5%, the lowest since August 2022.
The closely watched core price index, which strips out some volatile food and energy prices, climbed 0.16% in early May.
Capital Economics’ Kimberley Sperrfechter said the rise in headline inflation is “unlikely to sway the central bank’s thinking, and expects a rate cut at the bank’s June meeting given the weak state of Mexico’s economy.
Banco BASE, meanwhile, said in an analysis note that it would be “prudent” for the Bank of Mexico pause its rate-cutting cycle, noting that annual core inflation rose to its highest level since August 2024.
“This is a cause for concern, as the core component determines the trajectory of headline inflation over the medium and long term, and its recent upward trend suggests that the Bank of Mexico has not yet achieved sustained inflation convergence to the 3% target,” Banco BASE said.
(Reporting by Brendan O’Boyle; Editing by Kylie Madry)
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