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Puerto Vallarta News NetworkBusiness News 

Mexico September Inflation Up Less Than Expected
email this pageprint this pageemail usPatrick Rucker - Reuters
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October 08, 2010



Mexico City - Mexican consumer prices rose less than expected in September as a slow recovery in Latin America's second-largest economy kept inflation pressures in check.

Consumer prices rose 0.52 percent in September, the central bank said on Thursday, whereas analysts had expected prices would rise 0.55 percent.

The core index, which strips out some volatile food and energy prices, rose 0.38 percent MXCPIX=ECI.

Consumer prices rose 3.70 percent in the 12 months through September, up from 3.68 percent in the same period to end-August.

Mexico's economy, which shrank 6.5 percent in 2009, will grow between 4.5 and 5.0 percent this year, the central bank chief has predicted.

That relatively weak expansion makes Mexico a laggard in regional nations, many of which have already begun a monetary tightening cycle to cool their economies.

Most analysts do not expect Mexico's central bank to begin raising its benchmark lending rate before late 2011.

The fate of Mexico's economy is closely tied to that of the United States which absorbs roughly 80 percent of exports and the uneven recovery north of the border casts a cloud of uncertainty over Mexico's future.

Many analysts expect Mexico could be hurt in the near term by a regional phenomenon that has seen foreign investors pour money into developing economies as they hunt for higher yields. An appreciating peso could hurt manufacturing exports.

State-set gasoline prices have been climbing this year as the government tries to wean consumers off subsidies, and this contributed in part to September's inflation, the central bank reported.

Education costs also saw an uptick while prices for basic foodstuffs such as tomato and squash were variable.

(Editing by James Dalgleish)




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