Inflation is the second most trending issue on Sentifi with over 1,900 voices in 24 hours as the crowd discussed a lot about the recent released inflation data. India, Egypt and Mexico all saw an increasing inflation rate though Mexico’s was still below the country’s target. The latest inflation data will have huge impact on the key interest rates decision in their central bank’s meetings.
Reuters poll held among the economists predicted that the India’s consumer price inflation would increase up to 5.52% in May. According to the economists, the good monsoon rains can temper the inflation in the coming months and give central bank more room to ease further.
Vegetable and edible oil prices in India rose in May and so did fuel prices. However, the India weather office reported that the forecast rain level would be above the average in the coming months. Thus, there is hope in a revival of farm output, which in turn helps decrease the food prices and interest rates.
Egypt inflation rate reached the highest level of 12.23% since February 2009, according to the country’s central bank. This record level of inflation posed more challenges to Egypt’s policymakers in its fight against the shortage of foreign currency to boost growth.
The central bank will look closely at the inflation data to review the key interest rates in its next meeting on June 16. To limit inflation in March, the central bank lifted the rate by 1.5%, but kept it unchanged in the April meeting to expect the more-delayed effect. According to Shady Fakhoury, economist at Beltone Financial Holdings, Egypt’s central bank would not raise rates this week either in fear of increasing the treasury yields or widening the government’s fiscal deficit.
Mexico’s national statistics agency reported on Thursday that inflation rose to 2.6% in 12 months to May but stayed below the government’s forecast. Mexico’s inflation rate was at the lowest level in May 2015 and has stayed lower than the central bank’s target since then.
The policymakers had raised the interest rates in February to support the falling peso due to the slump in global oil prices and in the economic outlook on global growth. The peso also bounced back after the U.S. released weak job data, which dismissed the hope of an increase in borrowing costs this month.
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