Mexico Inflation Hits 8-Year High

Mexico’s annual inflation rate rose in May to its highest level in more than eight years, fueled by higher energy prices and lingering uncertainty over the key US trade relationship.

Consumer prices increased at a rate of 6.16%, according to official data released on Thursday. It was the highest level since April 2009, when the international financial crisis was at its height, AFP reported.

Inflation has quickened in Mexico since the beginning of the year, when the government liberalized the price of gasoline and diesel as part of sweeping energy reforms.

Mexico’s central bank says the rise is also being driven by higher merchandise and agriculture prices and a weak peso—a lingering effect of US President Donald Trump’s tough talk on overhauling Mexico’s vital trade relationship with its northern neighbor.

Inflation had also hit an eight-year high in April, when it came in at 5.82%. The rate has now stood above the central bank’s target ceiling of 4% for five consecutive months.

The bank has raised its key interest rate nine times since December 2015 in a bid to control inflation. It now stands at 6.75%, which is also a more than eight-year high. Central bank chief, Agustin Carstens, predicted late last month that inflation would be back near target by the end of 2018.

Consulting firm Capital Economics forecast on Thursday that “both inflation and interest rates are probably close to peaking”.

Meanwhile, the US Chamber of Commerce this week started the US-Mexico Economic Council, an organization that will work to improve economic and commercial partnerships between the two countries.

The US-Mexico Economic Council will serve as “a platform for both countries’ private sectors to work together in the creation of innovative solutions to shared policy challenges, all in the name of boosting growth and creating good jobs in the United States and across North America”, the chamber said.