Mexico’s Consumer Prices Increased Less Than Expected in July

(Bloomberg) -- Mexico's consumer prices rose less than expected in July, keeping the annual inflation rate below the central bank's target for a 15th consecutive month.

Prices climbed 0.26 percent from the previous month, the national statistics institute said on its website Tuesday. The median forecast of 20 analysts surveyed by Bloomberg was for a 0.33 percent increase. From a year earlier, prices climbed 2.65 percent compared with 2.54 percent in June. Banco de Mexico targets inflation of 3 percent and its next rate decision will be published Thursday.

Mexico raised its benchmark interest rate in June by a more-than-expected half point to 4.25 percent on concern that continued peso weakness could spur consumer price increases. Central bank Deputy Governor Manuel Sanchez said Aug. 5 that the recent increase in core inflation was worrisome, though the peso's plunge has had a minor impact on driving up inflation.

The peso strengthened 0.2 percent to 18.5212 per dollar at 8:03 a.m. in Mexico City. The currency was down 7.3 percent this year through Monday, the worst performer among major currencies tracked by Bloomberg after the British pound.

Core prices, which exclude energy and farm costs, increased 0.17 percent in July from a month earlier, compared with the 0.19 percent median forecast of analysts surveyed by Bloomberg.

To contact the reporter on this story: Nacha Cattan in Mexico City at ncattan@bloomberg.net. To contact the editors responsible for this story: Vivianne Rodrigues at vrodrigues3@bloomberg.net, Robert Jameson, Philip Sanders