Mexican inflation expected to tick up in early May: Reuters poll

(C) Reuters. FILE PHOTO: A woman reaches for a bag of produce in the Central de Abastos wholesale market in Mexico City

MEXICO CITY (Reuters) – Mexican annual inflation likely accelerated in the first half of May due to a rise in the cost of gasoline and some foodstuffs, but should still be well below the central bank’s target rate of 3%, a Reuters poll showed on Tuesday.

The median forecast of 10 analysts was for inflation to pick up to 2.46% during early May from 2.21% in the second half of April, giving the Bank of Mexico room to consider further monetary policy loosening in the coming months.

The central bank last week lowered its benchmark rate by 50 basis points to 5.50% and hinted further rate cuts could follow with the economy likely to suffer a major contraction in the second quarter due to the coronavirus crisis.

“We believe inflation will stay below the 3% target in the coming months … the short-term dynamics will support further cuts in the benchmark rate in June and August,” Mexican bank Banorte said in a report.

Compared with the previous two-week period, prices were seen falling 0.07%, though the core index was expected to increase 0.12%, the survey showed. Annual core inflation was expected to accelerate to 3.64% from 3.61% in late April.

The national statistical institute INEGI will publish the latest Mexican inflation data on Friday.