West News Wire: According to official data released on Thursday, Mexico’s annual inflation accelerated in June to a level not seen since the beginning of 2001, suggesting the central bank will be forced to continue monetary tightening to control spiraling consumer prices.

The national statistics agency reported that consumer prices in Mexico increased by 7.99% in the year ending in June, which was slightly higher than the 7.95% consensus estimate of economists surveyed by the Reuters news agency.

That was also significantly higher than the central bank’s target of 3 percent, plus or minus one percentage point, and it was the highest level since Mexico’s 12-month inflation rate of 8.11 percent in January 2001.

After a record 75-basis-point rate increase, Banxico, as the central bank is known, to keep raising rates after a record 75-basis-point hike last month, when it warned it would hike rates again and by as much to curb inflation.

The bank, which has increased rates by 375 basis points since mid-2021, will announce its next monetary policy decision on August 11.

“A 75 basis-point hike in the policy rate in August to 8.5 percent looks almost certain, and the risks to our forecast that the policy rate will end the year at 9.5 percent increasingly look skewed to the upside,” said William Jackson, chief emerging markets economist at Capital Economics.

Consumer prices rose 0.84 percent in June, non-seasonally adjusted figures showed, ahead of a market forecast of a 0.81 percent increase.

The closely watched core index, which strips out some volatile food and energy prices, rose 0.77 percent during the month, below expectations of a 0.8 percent rise.

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Andres Abadia, Latin America economist at Pantheon Macroeconomics, called the data a bad end to the second quarter, with pass-through from higher commodity prices the key issue.

“That said, we still expect a gradual downtrend in inflation over the second half of the year, thanks to the lagged effect of tighter monetary policy, and the impact of recent government policies to put a lid on key prices,” Abadia said in a note to clients.


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