Updated 01:41 PM EST, Fri, Jan 22, 2021

Mexican Inflation Sinks to New Lows

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Mexico's inflation has sunk to a record new low this early December. It showed very little impact from a sharply weaker Mexican peso after the country's central bank raised rates for the first time in over seven years.

It was reported by Vallarta Daily that the Mexican inflation slowed to two percent in the past 12 months. The national statistics institute said that this was well below the 2.21 percent that was reached in November, its seventh consecutive record low.

Mexico's central bank predicted that the country's annual inflation will end at around two percent this year, before climbing back to around the three percent next year, which is the bank's target. However, sluggish growth and price pressures continue to hound Latin America's number two economy.

Early in November, the IMF conducted a far-ranging review and found that the country had access to financial markets, debt levels that were sustainable, as well as a stable and sound financial system.

The Mexican government expects the local economy to increase between 2 percent and 2.8 percent this year, with the help of domestic growth.

Earlier in the week, the Mexican central bank has borrowing costs on an all-time low, in an attempt to stem further weakening in the Mexican currency after the Federal Reserve lifted U.S. interest rates.

The Mexican currency has tumbled to a series of lows this year amid concerns of higher U.S. borrowing costs. It has continued to slip since the rate hikes last week.

Reuters reported that economic activity in the country rose by about 0.2 percent in October. This was its weakest showing since July. The national statistics institute said that industrial and agricultural output shrank.

According to the latest data, the depreciation of the Mexican currency has made imported goods more expensive. This has been offset by price drops, such as a big drop in telecommunications costs.

The data also showed that consumer prices rose by as much as 0.26 percent during the earlier part of December. Financial analysts from Reuters predicted a 0.28 percent increase. It was also reported by Reuters that Mexico's economy grew by 2.1 percent in 2014, an increase from the 1.4 percent rate registered in 2013. 

According to the report, the core price index, which strips out some volatile food and energy prices, increased by 0.27. Reuters had predicted a 0.23 increase. The numbers took the 12-month core inflation rate to 2.39 percent, which was completely in line with expectations for a 2.39 percent increase.

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