MNI BRIEF: Mexico November Inflation Up 3.80%, Above Consensus

Mexico's INPC annual inflation was 3.80% in November, the Mexican National Institute of Statistics and Geography said Friday, above the 3.69% consensus forecast and up from 3.57% in October.

Core inflation was 4.43%, up from 4.28% in the previous month. Headline inflation remains within the central bank's 3% target range, which allows for a 1-percentage-point variation in each direction. "At a monthly rate, the non-core price index rose 2.28 percent. Within this group, fruit and vegetable prices increased 3.49% and energy and government-authorized tariffs rose 2.97 percent," INEGI said.

Recent progress in bringing inflation closer to the 3% target was the main reason behind the Central Bank of Mexico’s decision to cut rates aggressively this year.

Banxico reduced the policy rate by 25bps at its last meeting to 7.25%, but core inflation resilience led to a split decision, with deputy governor Jonathan Heath voting to hold borrowing costs unchanged and raising doubts about whether Banxico would have room to cut next year. (See MNI INTERVIEW: Rate Lags On Credit Back Gradual Easing - Mejia)