Mexico’s annual inflation slowed more than expected in September, likely helping keep a third straight interest rate cut in play at the central bank’s next meeting.
Consumer prices increased 4.58 percent compared to the previous year, below the average estimate of 4.61 percent of analysts surveyed by Bloomberg, the national statistics institute reported this Wednesday.
The annual reading has slowed more than expected for two straight months, but remains above the bank’s target range of 3 percent, plus or minus 1 percentage point. Compared to the previous month, prices rose 0.05 percent. Core inflation, which excludes volatile items such as fuel, came in slightly below estimates, at 3.91 percent.
Banxico, as the central bank is known, cut borrowing costs for the second straight meeting to 10.5 percent on Sept. 26, as inflation readings are declining faster than expected and the economy heads into a third year of slower growth.
In August, Banxico cut its 2024 gross domestic product forecast to 1.5 percent from 2.4 percent just three months earlier, suggesting that activity and demand that have helped sustain persistently high inflation readings are now weakening. The bank’s decision in September was split, with Deputy Governor Jonathan Heath being the only member to vote to keep the rate at 10.75 percent. Heath had also voted to keep the rate unchanged at the August meeting, where he was joined in dissent by his colleague Irene Espinosa. Economists in the most recent Citi survey released Oct. 7 expect inflation this year to end at 4.44 percent and in 2025 to slow to 3.81 percent. Its prediction for 2024 economic growth matches the central bank’s forecast of 1.5 percent.
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