Mexico inflation ticks up, boosting rate hike expectations
MEXICO CITY, Dec 7 (Reuters) - Mexican inflation accelerated for a second straight month in November, data showed on Thursday, raising the likelihood the central bank will raise interest rates this month to contain price pressures.
Annual inflation ticked up to 6.63 percent from 6.37 percent in October, data from the national statistics agency showed. The median forecast of a Reuters poll of analysts was 6.60 percent.
The latest data took inflation to its steepest rate since August, when it reached the highest level in 16 years.
The central bank publishes its latest rate decision on Dec.
14. It will be the first presided over by new governor Alejandro Diaz de Leon following the departure of Agustin Carstens to the Bank for International Settlements at the end of November.
"We now expect policymakers to raise interest rates by 25 basis points (to 7.25 percent) at Alejandro Diaz de Leon's first meeting as Central Bank Governor next week," Capital Economics said in a note to clients following the data.
In his first few days on the job, Diaz de Leon said Mexico's inflation outlook had deteriorated in recent months, and warned inflation's predicted downward path in 2018 could be affected by more possible shocks in the future.
Analysts are concerned a further slump in Mexico's peso could boost consumer prices due to higher import costs.
The peso has been hurt by concerns that U.S. President Donald Trump could abandon the North American Free Trade Agreement (NAFTA), which underpins Mexico's export economy.
Banco BASE economist Gabriela Siller said the recent depreciation in the peso and a predicted U.S. Federal Reserve interest rate hike on Dec. 13, meant there was a 70 percent chance Mexico would raise rates.
Goldman Sachs economist Alberto Ramos said in a note a quarter point rate increase in Mexico was the most likely scenario.
Compared with the prior month, consumer prices rose 1.03 percent in November, boosted by higher electricity, gas and transport costs, figures from the agency showed. The monthly increase in the index was the highest since January.
The core index, which strips out some volatile food and energy prices, rose 0.34 percent during the month .