Mexico's headline inflation seen easing in July, core inflation still above target
The median estimate from 13 analysts forecast headline inflation of 3.53% in the 12 months through July, which if confirmed would be its lowest reading since December 2020. (MXCPIA=ECI), opens new tab
For core inflation, considered a better parameter for measuring price trends because it eliminates highly volatile products, estimates indicate that it stood at 4.23%, slightly below June's 4.24% (MXCCPI=ECI), opens new tab but still above the Bank of Mexico's target of 3%, plus or minus a percentage point.
The central bank last month lowered its benchmark rate by half a percentage point, although the decision by the five-member board of governors was not unanimous, after Deputy Governor Jonathan Heath voted to leave it unchanged.
According to the minutes from July's meeting, all four officials who backed the cut — the fourth consecutive cut of that magnitude — said the board may adopt a more gradual approach in future decisions, as inflation shows signs of slowing and economic activity proceeds at a sluggish pace.
Compared to the previous month, consumer prices are forecast to have risen by 0.28% (MXINFL=ECI), opens new tab in July, while for the core index an increase of 0.30% is expected (MXCPIX=ECI), opens new tab, according to the survey. The official data will be released on Thursday, a few hours before the central bank's rate decision.
Another Reuters poll published on Friday showed that the market is widely discounting that the bank will announce a decrease of only 25 basis points in the cost of credit.
The central bank has cut its benchmark rate by 325 bps since early 2024 as part of a monetary easing cycle that began after the rate reached a record high of 11.25%.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Reuters
2 hours ago
- Reuters
Some in BOJ saw scope to hike rates if trade friction eases, June minutes show
TOKYO, Aug 5 (Reuters) - Some Bank of Japan policymakers saw scope to resume interest rate increases once trade friction caused by U.S. tariffs eased, minutes of the bank's June meeting showed, a sign Tokyo's recent trade deal with Washington cleared a key hurdle for more hikes. At the June meeting, many members said the central bank must keep interest rates steady due to downside risks to the economy from U.S. tariffs, the minutes showed on Tuesday. But they also saw inflation overshooting expectations, with some warning that recent rises in food costs could affect public perceptions on future inflation, the minutes showed. "Given high uncertainties, the BOJ would likely pause rate hikes for the time being. But it also must respond flexibly and nimbly, and return to a rate-hike phase depending on U.S. policy developments," one member was quoted as saying. Another member said the BOJ might need to raise rates decisively even when uncertainty remained high, given the fact inflation remained higher than expected. "As wages had been solid and prices had been slightly higher than expected, the Bank would likely shift away from the current wait-and-see approach and consider resuming rate hikes, if trade friction de-escalates," a few members were quoted as saying. The remarks highlight the board's growing attention to upside inflation risks, which led the BOJ to signal its readiness to keep raising rates even as U.S. tariffs clouded the economic outlook. At the June 16-17 meeting, the BOJ kept interest rates steady at 0.5% and decided to decelerate the pace of its balance sheet drawdown next year, signalling its preference to move cautiously in removing remnants of its massive stimulus. The impact of U.S. tariffs was the focus of debate at the June meeting, which was held before Japan clinched a trade deal with the U.S. in July and won cuts to hefty tariffs. While one member cautioned that it would take some time to gauge the impact of U.S. tariffs on corporate earnings, some said the hit to growth from the higher levy could be smaller than initially expected, the minutes of the June meeting showed. Japanese companies appear to have shed their long-held view that wages and prices must be kept low, one member said, adding the focus would be whether firms would keep hiking pay even if their profits are squeezed by U.S. tariffs. "I'm paying attention to the fact we're seeing home-made inflation emerge, as seen in rising wages driven by labour shortages," another member was quoted as saying. In deciding on next year's bond taper plan, some in the board also saw the need to scrutinise the desirable size of the BOJ's balance sheet in the long run, the minutes showed. While one member said it was desirable for the BOJ to eventually reduce monthly bond buying to zero, another said a cut to around 1 trillion yen ($6.8 billion) would suffice, the minutes said. The central bank is currently tapering bond buying so that monthly purchases slow to around 3 trillion yen by March 2026. In an extended taper plan decided in June, the BOJ expects monthly purchases fall to around 2 trillion yen by March 2027. The BOJ kept interest rates steady at a subsequent meeting on July 30-31. But it revised up its inflation forecasts and offered a less gloomy outlook on the economy, keeping alive the possibility of a resumption in rate hikes this year. ($1 = 146.9900 yen)
Reuters
3 hours ago
- Reuters
Philippine annual inflation at 0.9% in July
MANILA, Aug 5 (Reuters) - Philippine annual inflation moderated to 0.9% in July from the previous month's 1.4% rate, helped by a slower rise in utility costs, the statistics agency said on Tuesday. The headline rate was the lowest reading since October 2019. Economists in a Reuters poll had expected an annual inflation rate of 1.1%, within the central bank's forecast range of 0.5% to 1.3% for the month. The annual core inflation rate, which strips out volatile food and energy prices, was 2.3% in July.
Reuters
3 hours ago
- Reuters
Canadian ministers to visit Mexico to discuss trade with Mexican officials
Aug 4 (Reuters) - Canadian foreign minister Anita Anand and Finance Minister François-Philippe Champagne will visit Mexico this week to advance priorities on economic growth and trade with their counterparts and with President Claudia Sheinbaum, Ottawa said on Monday, amid trade disputes with the United States. The visit will take place from August 5 to August 6, according to a release from Global Affairs Canada, which represents the Foreign Ministry and the Trade Ministry.
