By Natalia Siniawski
(Reuters) -Mexico’s headline inflation accelerated for the second month in a row in December, while the closely watched core rate maintained its downward trend, official data showed on Tuesday.
Annual headline inflation in Latin America’s second largest economy hit 4.66% in December, statistics agency INEGI said, overshooting the 4.55% expected by economists polled by Reuters and up from 4.32% in the previous month.
The breakdown of the data showed that last month’s rise in the headline rate was due to stronger non-core inflation, said Capital Economics analyst Jason Tuvey.
“This reflected a spike in agricultural prices, with fruit and vegetables inflation hitting a two-year high,” he said.
Pantheon Macroeconomics’ Chief Latin America Economist Andres Abadia agreed the biggest gain was driven by the non-core component. “The main driver of the increase was higher prices for non-processed food,” he said.
Core inflation, which strips out some volatile energy and food prices, posted its 11th consecutive monthly downtick. The annual rate hit its lowest since September 2021 at 5.09%.
During the month, core prices rose 0.44%, up from the 0.26% increase seen last month, while the headline index was up 0.71%, also above the 0.64% reported in November.
Mexico’s central bank, known as Banxico, has maintained a “slightly hawkish” posture in its monetary policy.
It intends to sustain its key interest rate at a record peak of 11.25% while it waits for inflation to go back to the target of 3%, plus or minus one percentage point.
“This was a poor end to the year,” Abadia said, but added the general inflation picture continues to improve at the margin, and he expected headline and core inflation to decline consistently over the coming months.
(Reporting by Natalia Siniawski, Editing by William Maclean and Barbara Lewis)