| | |  News Around the Republic of Mexico 
Mexico Consumer Prices Fall in Early April
 Jason Lange & Michael O'Boyle - Reuters
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April 23, 2010
| | Mexican prices fell 0.31 percent during the first two weeks of the month, pushing the country's 12-month inflation rate to 4.41 percent. | |
Mexico City - Mexican consumer prices unexpectedly fell in the first half of April, taking pressure off the central bank to raise interest rates, data showed on Thursday.
Mexican prices fell 0.31 percent during the first two weeks of the month, pushing the country's 12-month inflation rate to 4.41 percent, the central bank said.
Prices fell for electricity, packaged tours and airline tickets.
Mexico's central bank is expected to raise interest rates later this year to contain inflation, which accelerated early this year mostly due to higher taxes and fuel prices set by the government.
"This shows that the central bank has plenty of space to leave rates as they are for some time," said Luis Flores, an economist at brokerage IXE in Mexico City.
Investors reacted by cutting bets on the likelihood of interest rate hikes.
The yield on Mexico's interest rate future contract due in October TIIV0 fell 4 basis points to 5.26 percent, while the yield for Mexico's 20-year government peso bond MX20YT=RR dropped sharply, down 9 basis points to bid 7.8 percent.
Analysts in a Reuters poll on average were expecting an increase of 0.12 percent in Mexican consumer prices during early April.
The closely-watched core consumer price index, which strips out some volatile food and energy prices, dropped 0.03 percent during the first two weeks of the month.
Headline prices had risen 0.46 percent in the first half of March, while core prices rose 0.18 percent.
In a separate report, Mexican retail sales rose 2.3 percent in February compared with the same month a year earlier, the national statistics agency said. Analysts surveyed by Reuters had expected sales to rise 1.5 percent.
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