Mexico’s inflation was little changed in May from the previous month with consumer prices rising at their fastest pace in more than two decades, led by higher food costs.
The consumer price index rose 0.18% last month and was up 7.65% from a year earlier, compared with 7.68% at the end of April, the National Statistics Institute said Thursday.
Core CPI, which excludes energy and agricultural products, rose 0.59% in May, nudging the 12-month rate up to 7.28% from 7.22% in April.
The Bank of Mexico raised its overnight interest-rate target by a half percentage point on May 12 to 7% in an eighth consecutive increase, and said it could consider more forceful moves if needed to bring inflation back to its 3% target.
Minutes for that meeting, and a subsequent inflation report from the central bank, fueled expectations that the bank will raise its policy rate by three-quarters of a percentage point at its June 23 meeting.
Inflation is running at its highest level in more than 21 years, and the central bank currently forecasts a return to the target in the first quarter of 2024.
While government subsidies on gasoline and diesel prices have helped keep energy inflation in check, food costs are rising at a double-digit pace.
In early May, the government reached an agreement with some private-sector producers and distributors aimed at keeping a lid on food prices. The anti-inflation plan includes government support for small farmers to increase the production of grains, a temporary freeze on government-run highway tolls, and the elimination of import tariffs on basic foodstuffs.
A number of key producers and retailers agreed not to raise the prices of certain products, including packaged bread and tortillas, for six months.
With information from Market Watch
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