MEXICO CITY, March 9 Mexico’s annual inflation surged to its highest in nearly seven years in February as the weak peso drove up prices of imported goods like cars, data showed on Thursday, in a sign that the central bank could again increase interest rates. Inflation in the 12 months through February rose to 4.86 percent, its highest since March 2010, the national statistics agency said.
That compared with 4.72 percent in January and expectations of 4.82 percent of economists in a Reuters poll. Mexico’s government raised gasoline prices in January, prompting protests and looting across the country and pushing inflation above the central bank’s 4 percent tolerance ceiling that month.
A jump in car prices was the biggest influence on the price index in February, followed by cost increases for cooking gas and tortillas.
The central bank has hiked rates to an eight-year high to combat the inflation jump and shore up a weak peso hurt by fears of what impact U.S. President Donald Trump’s policies could have on Latin America’s second-largest economy. Yields on Mexican interest rate swaps project that the central bank could raise interest rates by around 100 basis points by the end of the year .
The annual reading of the core index, which strips out some volatile food and energy prices and reflects higher import prices on goods due to the weak peso, rose to 4.26 percent from 3.84 percent in January. From the previous month, consumer prices rose 0.58 percent in February, while the core index gained 0.76 percent.