Mexico raises key interest rate to 7 pct to combat inflation

Mexico raises key interest rate to 7 pct to combat inflation

Mexico raises key interest rate to 7 pct to combat inflation

Statistics Canada says a modest easing in the rate of gasoline price hikes in May helped curb the national inflation rate to 1.3 per cent last month, from 1.6 per cent in April. The other one was unchanged at 1.3 per cent.

On a month-over-month basis, CPI in May edged upward 0.1%.

The central bank said in a statement that "the reference rate has reached a level that is consistent with the process of efficient convergence of inflation to the 3% target".

However, some economists have pointed to weak core inflation as a possible reason for the bank to hold off a little longer.

The May CPI report will likely take "some of the steam out of the bank-is-going-to-hike-rates-soon freight train", said Doug Porter, chief economist at BMO Capital Markets.

"The monetary policy that the Bank of Mexico has implemented has contributed to keeping medium- and long-term inflation forecasts stable", it said.

Consumer prices in B.C. rose at an annual rate of 1.9%.

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The data was released as the economy strengthens and the central bank prepares to make a scheduled rate announcement on July 12.

Chances of a hike in July fell to just 20 percent from one-in-three before the inflation report, data from the overnight index swaps market showed.

"Canada's inflation rate is now not only well below Britain and the US, but it is now also lower than that in China and the European Union".

Putting a damper on price increases was a 5.5% year-over-year drop in electricity costs.

Compared to a year earlier, Statistics Canada said the price of electricity in the country's most-populated province fell last month by 16.1 per cent. The clothing and footwear index fell 1.5%.

In its report Friday, Statistics Canada said year-over-year gas prices rose 6.8 per cent in May after climbing 15.9 per cent the previous month. The homeowners' replacement cost - or the price to maintain a residence at its current market value - rose 4.4%, the biggest gain since 2010.

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