Early August Mexico prices up 0.42%, rate hikes set to continue

MEXICO CITY, Aug 24 (Reuters) – Mexican consumer prices rose 0.42% in the first half of August, pushing headline annual inflation to 8.62%, both slightly above expectations of the market, according to data from the national statistics agency INEGI published on Wednesday.

The closely watched underlying price index, which excludes some volatile food and energy prices, rose 0.49% in early August. Annual underlying inflation stood at 7.97%.

The latest consumer price inflation figures likely bolster bets that Banxico, as the Bank of Mexico is known, will raise its benchmark interest rate again in September.

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The Mexican central bank is targeting inflation of 3%, plus or minus one percentage point.

Analysts polled by Reuters had forecast annual headline inflation to climb to 8.52% in the first half of the month, on the back of an expected 0.35% rise over the period.

Banxico raised its benchmark interest rate by three-quarters of a percentage point to a record high of 8.5% at its August meeting, reflecting the latest policy move by the US Federal Reserve as Mexican inflation reached a high of more than two decades. Read more

Banxico’s board voted to hike rates by a total of 450 basis points in the past 10 monetary policy meetings as the monetary authority struggles to bring inflation back to its target.

Looking at the core index, INEGI said, prices for goods rose 0.72 percent and services 0.22 percent in the first half of August.

Within the non-core index, he added, agricultural commodity prices rose 0.45 percent while those of energy and government-authorized tariffs rose 0.03 percent.

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Reporting by Anthony Esposito; Additional reporting by Gabriel Araujo; Editing by Catherine Evans

Our standards: The Thomson Reuters Trust Principles.

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