Mexico annual inflation eases less than forecast in July

[August 09, 2021]  MEXICO CITY (Reuters) - Mexican annual inflation slowed to the lowest level in four months in July but still slightly overshot expectations to remain well above the central bank's target rate, data from the national statistics agency INEGI showed on Monday.

Consumer prices increased by 5.81% in the year through July, the lowest rate since March, the INEGI figures showed. The data compared with the consensus forecast of a Reuters poll for a reading of 5.77%. In June, inflation stood at 5.88%.

The central bank, which will hold its next monetary policy meeting on Thursday, targets an inflation rate of 3%, with a one percentage point tolerance range above and below that.

Expectations have been growing that the bank could hike its benchmark interest rate for the second meeting in a row in a bid to contain price pressures in Latin America's no. 2 economy.

The INEGI data showed that the index of core annual inflation, which strips out some volatile items, accelerated to 4.66%, the highest rate since the end of 2017. That figure was in line with the reading of the Reuters poll.

Compared with the previous month, headline consumer prices rose by 0.59% in July, while the core price index advanced by 0.48% from June, the data showed.

(Reporting by Dave Graham, Editing by Louise Heavens)

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