Mexico annual inflation slows in 1st half of September

MEXICO CITY: Mexico inflation climbed less than expected in the first half of September, giving the central bank more room to lower borrowing rates.

The consumer price index rose 0.21 percent in the first half of the month, the national statistics agency said on Thursday, compared with the 0.36 percent rise expected by analysts in a Reuters poll.

The annual inflation rate slowed to 3.16 percent through the first half of September. Analysts had expected inflation to touch 3.31 percent from the 3.42 percent clocked at the end of last month.

Economic growth north of the border keeps Mexico factories humming and uncertainty about the US economy has caused many analysts to recently pare their forecasts for growth.

Thrifty Mexican consumers are also keeping a lid on domestic demand with retail sales in July disappointing forecasters.

Since the central bank's last policy-setting meeting and minutes were released, bank chief Agustin Carstens has given no signal that he is willing to cut rates.

But economists expect at least a 25 basis point cut at the next meeting, even while the economy faces contrary pressures like a weakening currency.

According to a separate government report released on Thursday, Mexican private spending expanded by 0.75 percent between April and June this year and up 4.3 percent compared to the same period last year.

Aggregate demand was up 1.1 percent in the second quarter compared with the first while the figure was up 4.2 percent from a year ago.

Copyright Reuters, 2011