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Mexican Inflation Drops in February

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By Anthony Harrup

In Mexico City, inflation has shown a significant decrease in the first half of February, surprising many experts. This drop can be attributed to the lower prices of fresh produce, a trend that is likely to influence the Bank of Mexico’s decision to reduce interest rates.

According to the National Statistics Institute’s report released on Thursday, the consumer price index dropped by 0.1% in the first two weeks of February and saw a 4.45% increase compared to the same period last year. These figures indicate a positive change from the 4.88% annual inflation rate reported at the end of January.

The core Consumer Price Index (CPI), which excludes energy and fresh produce, experienced a slight increase of 0.24% in the first half of February. This led to a decrease in the 12-month inflation rate, dropping to 4.63% from 4.76% at the end of January.

Notably, a significant factor contributing to the overall decline in consumer prices was a notable 7.2% decrease in the prices of fruits and vegetables.

With this deceleration in inflation rates, there is anticipation that the Bank of Mexico will initiate a reduction in its benchmark interest-rate target starting in March. During the meeting on Feb. 8, the central bank opted to maintain the rate at 11.25% but hinted at possible rate cuts in upcoming meetings, contingent upon the behavior of inflation.

The minutes from the February meeting are set to be published on Thursday, offering further insight into the central bank’s considerations.

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