Mexico Records 6.77 Percent Inflation Rate in 2017, a 17-year High

Mexico recorded 6.77 percent annual inflation in 2017, the country said Tuesday, more than double its 3 percent target and a 17-year high. 

The government’s National Institute of Statistics and Geography published the widely expected figure, also saying that consumer prices rose 0.59 percent in December. 

“The inflation rebound is the direct consequence of unleashed lagged prices and the expansionary effects of prolonged fiscal and monetary policies in the previous few years,” said Alfredo Coutino, Latin America director at Moody’s Analytics. 

He added in a report that inflation was “not out of control” in Mexico but nevertheless “imposes a serious challenge to monetary policymaking for the year.” 

Coutino predicted that consumer price increases would “adjust down” in 2018, a presidential election year, largely because of the high base of comparison established in 2017. 

“In a political-electoral year, if monetary liquidity is not restricted to levels consistent with the economy’s limited performance or if the peso depreciates more significantly, then inflation will stay well above target for a more prolonged time,” he wrote. 

Mexico’s central bank raised its benchmark interest rate five times last year to try to rein in inflation, most recently on December 14 by a quarter-point to bring the rate to 7.25 percent. 
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