Mexico City - In August, Mexico experienced a decrease in inflation, reaching its lowest level in two-and-a-half years. This decline was primarily driven by a slowdown in the price increases of core goods.
According to the National Statistics Institute's report on Thursday, the consumer price index rose by 0.55% last month, resulting in a decrease in the annual inflation rate from 4.79% in July to 4.64%. This marks the lowest level of inflation since February 2021.
The core consumer price index, which excludes volatile energy and agricultural prices, experienced a 0.27% increase in August. Compared to the previous year, it rose by 6.08%, the lowest rate since December 2021.
While core inflation slowed down, there were increases in energy costs and the prices of fresh fruits and vegetables. Additionally, annual services inflation decreased from 5.24% in July to 5.15% in August. This drop was primarily attributed to lower airfares and tourism packages after the summer holiday season.
Despite seven consecutive months of declining inflation, it is anticipated that the Bank of Mexico will maintain the current reference interest rate of 11.25% for the remainder of the year. The central bank has kept the rate unchanged in its last three meetings, expressing their intention to maintain a stable interest rate for an extended period to bring inflation back to its target of 3%.
According to a recent poll conducted by Citigroup unit Citibanamex, a majority of banks expect the first interest-rate cut to occur in 2024. Previously, most analysts had anticipated an easing of the interest rate in the fourth quarter of this year.
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