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UPDATE 1-Mexican inflation eases in early October on annualized basis
October 24, 2017 / 3:05 PM / 2 months ago

UPDATE 1-Mexican inflation eases in early October on annualized basis

 (Recasts lead paragraph with annualized inflation details; adds
analyst's comments)
    MEXICO CITY, Oct 24 (Reuters) - Mexico's inflation eased
slightly on an annualized basis in the first half of October, in
line with expectations, data from the national statistics agency
showed on Tuesday, offering fresh evidence of a gradual cooling
in price pressures.
    Inflation was 6.30 percent in the first two weeks of this
month, compared with a reading of 6.35 percent for the year
through September. On a monthly basis, consumer prices rose
             by 0.62 percent, the data showed.
    The early October data exactly matched the consensus
forecast of a Reuters poll of analysts this week.
    September was the first month in which the annual rate had
eased in Latin America's second biggest economy since June 2016.
The latest data may come as a relief to policymakers, who hiked
interest rates to multi-year highs earlier this year to contain
inflation.
    Mexico's benchmark interest rate is at its highest level
since early 2009, with consumer price inflation running well
above the central bank's 3 percent target. The bank expects
inflation to ease in the coming months and head to its target in
the second half of 2018.
    Goldman Sachs economist Alberto Ramos said in a note to
clients that headline inflation seemed to have peaked in the
second half of August, when it reached 6.74 percent.
    "We forecast headline inflation to end the year slightly
above 6.0 percent, and to return to within the inflation target
band by mid-2018 given the combination of a tight monetary and
fiscal stance, the expectation of a stable exchange rate,
subdued domestic demand ... and likely, some further
mean-reversion of the recent food price negative shock," he
said.
    Considering the still-high level of annual headline and core
inflation and external risk factors, such as the ongoing
renegotiation of the North American Free Trade Agreement, the
central bank is likely to keep its benchmark interest rate on
hold in the near term, Ramos added.
    The closely watched core price index             , which
strips out some volatile food and energy prices, climbed by 0.21
percent in early October.

 (Reporting by Anthony Esposito; Editing by Paul Simao)
  

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