Mexico's inflation decreases slighty more than forecast

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[February 23, 2023]  MEXICO CITY (Reuters) - Mexico’s headline inflation decelerated more than forecast by analysts in early February, data from the national statistics agency showed on Thursday.  

People sell corn grains at a public market in Ozumba de Alzate, State of Mexico, Mexico, May 24, 2022. REUTERS/Edgard Garrido

Annual headline inflation in the first half of the month came down to 7.76% from 7.94% a month earlier, while economists polled by Reuters had forecast 7.80%.

Meanwhile the core index, which strips out some volatile food and energy prices, hit 8.38% on an annual basis, with a surprise of -0.04%.

However, annual inflation still remains above the Bank of Mexico's target rate of 3%, plus or minus one percentage point.

Consumer prices rose 0.30% during the first half of February, the national statistics agency said on Thursday, while the closely watched core price index climbed 0.35% in the period.

Banxico, as the Mexican central bank is known, has raised its key interest rate by 700 basis points since its rate-hiking cycle started in June 2021. Earlier this month it raised the rate by a larger-than-expected 50 basis points to 11%.

Banxico deputy bank governor Jonathan Heath told Reuters last week that the bank's monetary tightening cycle is nearing its end and nominal interest rates could top out at between 11.25% and 11.75%, at which point rates would be kept steady to allow them to take effect.

(Reporting by Natalia Siniawski; Editing by Steven Grattan)

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