Inflation slowed in March for the third consecutive month, according to the National Institute of Statistics and Geography (Inegi).
Inegi said that consumer prices were 5.04% higher last month compared to those of March 2017. It was the lowest year over year increase since February 2017 when annual inflation reached 4.86%, and 0.3% lower than last month’s rate.
Mexico’s central bank has a target of 3% inflation.
Higher prices for fuel, electricity, tomatoes, limes and eggs placed pressure on inflation but their impact was countered by lower prices for liquefied petroleum gas and fruit and vegetables including nopales, potatoes, onions, bananas and beans.
Average prices for regular gasoline known as magna increased nationally by 11.4% last month compared to March 2017 while premium gas rose 8.4% and diesel jumped by just over 10%, according to the Energy Regulatory Commission (CRE).
The price hikes translate into an increase of 1.76 pesos (just under US $ 0.10) per liter for motorists buying magna, 1.49 pesos per liter for premium and 1.7 pesos per liter for diesel.
Compared to February, the prices were up 0.8% for premium, 1.2% for magna and 1.3% for diesel.
The Bank of México increased interest rates to 7.5% in February, a nine-year high, but analysts believe that downward trending inflation will relieve pressure on the bank’s board to raise rates again when it meets Thursday.
Capital Economics said in a note that “the data support our view . . . that the central bank will leave interest rates unchanged at Thursday’s policy meeting.”
Goldman Sachs analyst Alberto Ramos also said that “barring new negative shocks to inflation” rates should “remain on hold at 7.5% for a while.”