Mexico’s inflation rate increased in January to 7.91%, prompting the country’s central bank to raise its prime interest rate to 11% on Thursday.
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The Bank of Mexico said that inflation was not coming down as expected and would probably remain high for some time. The bank said Mexico’s inflation rate is not likely to decline to the official 3% target until late 2024 or early 2025.
Vendors at a Mexican festival wait for customers as inflation rises in the Central American nation. (AP Photo/Fernando Llano, File)
The bank said core inflation showed a “surprising” rise to 8.45%. Food products experienced 14% annualized inflation, threatening to wipe out much of the 20% annual increase in minimum wages announced for 2023.
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The central bank’s interest rate is at its highest level since 2007. The Mexican peso rose 0.9% against the US dollar on Thursday to close at 18.77 per $1.
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The bank said in a statement that “global risks include a pandemic, persisting inflationary pressures, worsening geopolitical tensions, and tighter monetary and financial conditions.”
