By Aida Pelaez-Fernandez
MEXICO CITY, Nov 9 (Reuters) – Mexico’s annual inflation rate accelerated in October for a third consecutive month, official data showed on Monday, backing up a cautious approach in the country’s monetary policy.
Consumer prices in Latin America’s second-largest economy stood at 3.75% in the year through October, accelerating from a 3.45% increase in September and landing higher than economists’ forecast in a Reuters poll that expected a 3.65% increase.
The closely watched core index, which strips out some volatile food and energy prices, rose 3.8% annually, also accelerating from the 3.75% registered in September and slightly ahead of expectations of a 3.78% increase.
Despite the recent rise, both headline and core annual inflation rates remained within Mexico’s central bank target range of 3%, plus or minus a percentage point.
“It seems highly unlikely that the central bank will alter its forward guidance to opt for further interest rate cuts,” said William Jackson, chief emerging markets economist at Capital Economics, adding that they expect rates to remain at their current levels for an extended period.
Mexico’s central bank, also known as Banxico, unexpectedly cut its benchmark interest rate last week by 25 basis points to 6.25%, in what it called a “one-time adjustment”.
The central bank said in its statement that the adjustment would help bring inflation towards its target and address external macroeconomic risks.
“The likelihood of inflation returning to the 3.0% target in 2027 is virtually nil,” Gabriella Siller, Banco Base’s economic analysis director, said on X.
In October alone, consumer prices increased 0.65%, following a 0.42% increase the prior month, according to non-seasonally adjusted figures, and compared with economists’ expectations of a 0.55% rise. Meanwhile the core rate rose 0.34%, above a 0.31% market forecast.
(Reporting by Aida Pelaez-Fernandez and Ricardo Figueroa; Additional reporting by Noe Torres; Editing by Louise Heavens and Chizu Nomiyama )
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