Consumer Prices Falling in Mexico

Mexico’s consumer prices last month fell the most in 42 years as electricity, food and education costs declined, cementing expectations that policy makers will keep interest rates at a record low this year.

Source: Bloomberg

Bloomberg: Mexico ‘Better Prepared’ for Europe Debt Crisis Than Peers, Rodriguez Says

To protect its economy from the effects of the European debt crisis, Mexico is increasing efforts to keep money in the country, stated Deputy Finance Minister Gerardo Rodriguez.

“We are a lot better prepared, especially relative to other countries, for a situation that could deteriorate externally,” said Rodriguez, 38. “All this points to a broad framework of creating additional spaces for a potential adverse scenario going forward. That’s what we are here for -- to prepare for negative scenarios.”

Mexico is unique; China to Brazil raise borrowing costs to combat inflation, but Mexico is the only major Latin American country that hasn’t raised rates this year. The annual inflation rate in the country a five-year low in March at 3.04 percent.

Low Inflation Rates in Mexico a Boon for Citizens and Investors

Good news for investors in Mexico: the country has one of the lowest inflation rates in Latin America. Unlike other economies in the region, Mexico is not dealing with increasing consumer prices. While Brazil is battling 6.5 percent inflation rates, Mexico's inflation rates are at a low 3.04 percent.

Reasons for the good news include the work of Bank of Mexico Governor Agustin Carstens, in combination with other factors such as  low food prices (because Mexico grows much of the food those in the nation consume) and subsidized electricity.

Mexico Doing Well, Investors Take Note

According to this article by the Financial Times, "Mexico is in an undeniable sweet spot right now" with regard to its economy and inflation. A report by HSBC notes that the combination of high oil prices and low domestic inflation sets the nation apart from other emerging markets. In the report, the authors revised their estimate for the Mexican peso, "which they now see as ending the year at 11.30 against the US dollar compared with their previous estimate of 11.80."