Mexico headline inflation seen slowing in early July to 2021 levels

Mexico headline inflation seen slowing in early July to 2021 levels

Business

Mexico headline inflation seen slowing in early July to 2021 levels

MEXICO CITY (Reuters) - Mexico's headline inflation likely eased in the first half of July to its lowest level in more than two years, but still remained above the central bank's target, a Reuters poll showed Friday, reinforcing bets the bank will hold its key rate longer.

The median forecast of 10 analysts see annual headline inflation (MXCPHI=ECI) at 4.77% in the first 15 days of the month, its lowest level since March 2021.

Core inflation (MXCPIC=ECI), which strips out volatile food and energy products, is forecast to have slid to 6.73% year-on-year, marking the eleventh consecutive fortnight of slowdown.

Both still remain well above the central bank's target of 3%, plus or minus 1 percentage point.

Last month, Mexico's central bank board members made the unanimous decision to hold its benchmark interest rate at 11.25% for the second time, and warned that it will be necessary to keep it at that level for a prolonged period of time for inflation to converge to its target.

Banxico first paused its rate hikes in May after a nearly two-year hiking cycle that began in June 2021.

In the first half of July, consumer prices (MXCPIF=ECI) were forecast to have risen 0.27% compared with the previous two-week period, while the core index (MXCPIH=ECI) likely rose 0.22%.