Mexican inflation rises faster than expected to 20-year high

FILE PHOTO: A general view of a market in Mexico City, Mexico, January 11, 2017. REUTERS / Tomas Bravo

December 9, 2021

MEXICO CITY (Reuters) – Mexico’s annual inflation rose faster than expected in November to its highest level in more than two decades, official data showed on Thursday, bolstering bets that the central bank The central bank will raise the benchmark interest rate again when it meets next week.

Inflation in Latin America’s No. 2 economy spiked to 7.37% last month from 6.24% in October, data from the national statistics agency INEGI showed. The consensus of the Reuters poll was 7.22%.

The November figure brought inflation to its highest level since January 2001.

Core inflation rate, including some volatile items, reached 5.67%.

The Central Bank of Mexico (Banxico) last month raised its benchmark interest rate by 25 basis points to 5%, the fourth straight increase. It also revised up its expectations for Mexican inflation later this year.

Banxico’s last monetary policy meeting of the year will be on December 16. The bank sets an inflation target of 3%, with a tolerance range of one percentage point above and below that.

Earlier this week, Irene Espinosa, a member of the central bank’s governing board, said Banxico’s monetary policy stance continues to be accommodative and it will react strongly to anchoring inflation expectations.

INEGI data showed that on a monthly basis, Mexican consumer prices rose 1.14% in November. Meanwhile, the core price index increased 0.37% from October.

(Reporting by Dave Graham; Editing by Andrew Cawthorne)