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Friday, June 24, 2011

Mexico's Prices Fall, Led by Food

Mexico’s consumer prices unexpectedly declined in the first half of June, significantly brought down by food and beverage costs in Latin America’s second-biggest economy. Even though economists had forecasted a 0.11% rise, prices fell 0.05% in the first two weeks of June, with food and beverage prices falling 0.40 percent.

The central bank reported these numbers today, and HSBC Holdings Plc economist, Sergio Martin, added that controlled prices are allowing the central bank to keep borrowing costs at a record low: “There are no inflationary pressures that could make the central bank raise rates,” Martin said in an over the phone interview from Mexico City. The report “was much more positive than what you could have expected.”

According to Martin, Mexico’s exchange rate is 'keeping a lid' on prices. The peso is up 10% since the end of 2009, the biggest advance among Latin American currencies after the Colombian peso.

Click here to read more on how Mexico's exchange rates are assisting it's economic boom.

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