MEXICO CITY – Mexico's inflation picked up slightly in October, coming in above expectations, mainly due to a seasonal jump in energy costs and higher public transport and telecommunications costs related to the recent earthquake in Mexico City.
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The consumer-price index rose 0.63% last month, pushing the annual rate slightly up to 6.37% from 6.35% at the end of September, the national statistics agency said Thursday. Analysts were expecting consumer prices to raise 0.60%.
Core CPI, which excludes energy and fresh fruit and vegetables, rose 0.25%, slowing the 12-month rate to 4.77% from 4.80%.
Inflation has retreated from August's peak, when it reached a 16-year-high at 6.66%, but remains stubbornly above the 6% and well above the central bank's 3% target.
The Bank of Mexico is expected to keep interest rates unchanged late Thursday, when it announces its latest policy decision, as the central bank believes an aggressive cycle of interest-rate increases that ended in June is delivering positive results and inflation will enter a downward path in the coming months.
The central bank expects consumer prices to significantly ease at the beginning of next year, and that inflation will return to its target toward the end of 2018.
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Inflation surged early this year, fueled by a jump in gasoline prices ordered by the government and the persistent weakness of the peso, which in turn made imports more expensive.
Most economists expect the central bank's next move to be a rate cut around August next year. But at a recent interview with The Wall Street Journal, Bank of Mexico Gov. Agustín Carstens called for patience and said the bank would only take action when inflation is "very near" the 3% target.
Electricity rates contributed the most to inflation in October, jumping 20%, as summertime subsidies in several cities came to an end. The impact is expected to be temporary.
Other temporary effects related to the deadly earthquake that hit Mexico City in September affected prices. Public transport costs rose last month after a decline in September, when the Mexico City government waived fares on the subway system due to the earthquake.
Some services costs, such as telecommunications and restaurants, also rose.
The rise of nonfood prices, which are hit the most by a weak peso, slowed, reflecting peso's gains during the summer. Agricultural prices fell 4% in October.
Write to Juan Montes at firstname.lastname@example.org
(END) Dow Jones Newswires
November 09, 2017 10:26 ET (15:26 GMT)