Mexico Inflation at 2-Year High, May Rise on Fuel Hike Alexandra Alper and Miguel Gutierrez - Reuters
go to original January 9, 2017

Mexico's December annual inflation rose at the fastest pace in two years, data showed on Monday, boosting chances the central bank will raise interest rates again at a time when prices are expected to be further fanned by a hike in fuel costs.

Consumer prices rose 3.36 percent from December 2015, national statistics agency INEGI said on Monday, the highest rate since December 2014, and above the central bank's 3 percent target.

The figure was below the 3.40 percent analysts forecast in a Reuters poll but up from 3.31 percent in November.

Consumer prices should rise faster after a double-digit hike in gasoline prices went into effect this month, some analysts said. The increase has spurred protests, looting and blockades throughout the country.

"We expect a much more accentuated rise in January," CitiBanamex said in a note, citing energy prices and a weak peso. The bank said inflation would surge beyond 4.6 percent on an annual basis.

Already, the fuel hike has prompted ride-hailing service Uber to raise user fees by 15 percent in Mexico City, while rival Cabify followed suit with a 6 percent fare increase announced on Monday.

Mexican authorities have also boosted electricity prices for certain sectors by 2.6 to 4.5 percent.

Last month, Mexico's central bank raised interest rates for the fifth time in 2016, to 5.75 percent, taking borrowing costs to the highest level since April 2009.

Read the rest at Reuters

Photo: Mexico City Sun

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