| | |  Business News | August 2008 
Mexico Inflation Accelerates on Food, Gasoline Prices
 Hugh Collins & Jens Erik Gould - Bloomberg
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Mexico's inflation accelerated to the fastest in almost in four years, driven by higher costs for food and gasoline.
Consumer prices climbed 5.39 percent in July from a year earlier, and 0.56 percent from June, the central bank said today on its Web site. Economists forecast consumer prices would rise 0.52 percent from the prior month and 5.36 percent annually, according to the median estimates compiled by Bloomberg.
Today's inflation report showed consumer prices continue to climb, affirming expectations that the bank will raise its benchmark rate for the third month next week, said Gray Newman, chief Latin America economist with Morgan Stanley in New York.
"Headline inflation did move more quickly than the market was looking for," Newman said. "This number reaffirms that the central bank will continue to hike."
Core inflation, which excludes some food energy costs, was 0.4 percent monthly.
The peso fell 0.6 percent to 10.0018 per dollar at 11:56 a.m. New York time from 9.9459 late yesterday. The currency has appreciated 8.9 percent this year, the second-best performance against the dollar of the 16 major currencies, buoyed by the widening gap between U.S. and Mexican benchmark interest rates.
That gap grew to 6 percentage points, the widest since August 2005, after Banco de Mexico raised its benchmark rate a quarter-percentage point to 8 percent on July 18.
Inflation figures in July showed evidence of higher prices for items beyond food, according to an e-mailed report by Bartosz Pawlowski, a strategist at TD Securities Ltd in London.
"Today's data confirms that inflation in Mexico is broad- based, and that risks of second round effects are high," Pawlowski wrote in a research note to clients.
On July 30, the central bank raised inflation forecasts through 2010 because of higher-than-expected commodity costs. The bank predicted that annual inflation will rise as high as 6 percent in the fourth quarter, up from a previous forecast of no more than 4.75 percent.
Inflation will not reach the bank's target of 3 percent before 2010, the bank said.
To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9(at)bloomberg.net; Hugh Collins in Mexico City at Hcollins8(at)bloomberg.net
Mexico Earnings Signal 'Difficult' Second Half, Santander Says
William Freebairn - Bloomberg
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Mexican companies' second-quarter earnings were lower than expected and signal a "difficult" second half of the year, Banco Santander SA said.
An "unusually high" number of companies reported earnings that were below estimates and some lowered their forecast for results, Santander head of equity research Gonzalo Fernandez wrote in a report e-mailed today. The results reflect Mexico's slowing economy, part of which is already reflected in stock prices, he wrote.
The country's benchmark Bolsa index dropped 0.9 percent to 27,090.54 as of 11:21 a.m. in New York.
To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn(at)bloomberg.net |
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