MEXICO CITY (Reuters) -Mexican consumer prices rose in January, data from the national statistics agency showed on Thursday, inching above December readings and market expectations, likely leading the Bank of Mexico to hike the key interest rate later in the day.
Annual headline inflation accelerated to 7.91% in the 12 months through January, slightly above forecasts and higher than the 7.82% registered in December.
While inflation has been easing since hitting a more than 20-year high of 8.70% in August and September of last year, it still remains far above the central bank's target rate of 3%, plus or minus one percentage point.
Banxico, as the Bank of Mexico is known, has already raised its benchmark interest rate by 650 basis points during the current hiking cycle, which began in June 2021, as inflation surged past the target.
Jason Tuvey, senior emerging markets economists at Capital Economics, said the latest inflation data set the scene for Banxico to raise interest rates by 25 basis points to 10.75% later on Thursday.
"This will mark the end of the tightening cycle, but the pick up in services inflation raises the risk that officials deliver a bit more tightening," Tuvey said.
Gabriela Siller from Banco BASE said that "a 25 basis points raise in interest rates is expected, keeping pace with the Fed (U.S. Federal Reserve), but a 50 basis points increase would not go amiss given Mexico's inflationary pressures."
Monthly headline inflation accelerated 0.68% in January from a month earlier, while the closely watched core index, which strips out some volatile food and energy prices, increased 0.71%.
Annual core inflation stood at 8.45% in the 12 months through January.
Mexican President Andres Manuel Lopez Obrador last month said inflation in Mexico would begin to slow down after January.