(Reuters) -Mexico’s headline inflation rate eased to 4.79% in the first half of July to its lowest level in more than two years, the national statistics agency said on Monday, but was still above the central bank’s official target of 3%.
The level, which was the lowest since March 2021, was also slightly above the 4.77% predicted by economists polled by Reuters.
INEGI data showed that annual core inflation, which strips out some volatile food and energy prices, slid to 6.76% in the first two weeks of July.
Economists polled by Reuters had expected it to hit 6.73%.
Capital Economics’ deputy chief emerging markets economist, Jason Tuvey, said headline inflation in Latin America’s second-largest economy eased, but a renewed gain in services inflation will be a concern for officials at the Bank of Mexico, known as Banxico.
“The fresh rise in services inflation is being driven by the strength of the labour market and rapid wage growth,” he added.
Services inflation was up by 0.3%, in line with the gain a year ago.
Pantheon Macroeconomics’ chief LatAm economist Andres Abadia said the increase in the services component was “mainly due to higher airfares and tourist packages”.
Last month, Mexico’s central bank board members made the unanimous decision to keep its benchmark interest rate at 11.25% and said it might need to maintain rates at current levels for an extended period to bring inflation down to target.
Banxico first paused its rate hikes in May after a nearly two-year hiking cycle that began in June 2021.
(Reporting by Natalia SiniawskiEditing by Bernadette Baum and Sharon Singleton)
