Mexico Inflation Falls

Mexico’s annual inflation fell slightly in April, to 3.2% from 3.41% in March. The rate is now approaching record low levels last seen in November and has led to speculation by some analysts that there may even be room for further interest rate cuts later in the year. However, core annual inflation, which excludes food and energy prices, is actually on the rise – it registered 3.2% in April against 3.04% in March – driven by the construction boom and growing demand for materials. In addition, any rise in US Fed rates, leading to a tightening in the spread between Mexican and US rates, will leave less room for Banxico to cut.