Mexican inflation seen falling from 16-1/2 year high in January

MEXICO CITY (Reuters) – Mexican annualized inflation likely eased in January from a 16-1/2 year high, but policymakers are still expected to raise interest rates this week to contain concerns about persistent consumer price pressures.

The annual inflation rate in January was likely 5.51 percent versus 6.77 percent registered at the end of 2017 according to forecasts from 12 analysts. Data is set to be released at 8 a.m. [1400 GMT] on Thursday.

That would be the lowest level in ten months but is still well above the central bank’s target of 3.0 percent.

Policymakers are still expected to raise their benchmark interest rate by 25 basis points to 7.50 percent on Thursday to contain worries that inflation may not cool as fast as expected amid concerns the country’s peso could be battered again this year.

The annual rate was seen dropping in the month as the impact fades of sharp gasoline price increases in January 2017.

The Reuters poll estimates year-on-year core inflation dipped to 4.56 percent from 4.87 percent in December.

Compared with January, consumer prices were seen up 0.50 percent in the poll, while core inflation was seen rising 0.27 percent month-on-month.

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