By Aida Pelaez-Fernandez and Michael Susin
MEXICO CITY, July 9 (Reuters) - Mexico's annual inflation rate fell in June for the third consecutive month, to its lowest level since December 2020, official data showed on Thursday.
Annual prices in Latin America's second-largest economy slowed more than expected and settled into the central bank's target range, easing pressures to hike rates.
Consumer prices rose 3.37% in the year through June, the national statistics agency said, down from a 3.94% increase
the prior month. In a Reuters poll, economists had expected a 3.52% increase.
The larger-than-expected decline "will be welcomed by Banxico and means that interest rates will remain on hold in the near term," Capital Economics analyst Kimberley Sperrfechter said in a note.
The annual core rate stood at 4.03%, slightly above the Mexican central bank target range of 3%, plus or minus a percentage point.
The institution, also known as Banxico, held its benchmark interest rate at 6.5% late in June, in a unanimous decision, amid inflation concerns linked to foreign trade policies and geopolitical conflicts.
The central bank is expected to publish the minutes of that meeting later Thursday.
"It is likely that the authorities will keep the rate unchanged until they see more convincing evidence that core inflation is converging toward the target," Pantheon Macroeconomics' analysts said.
According to a Citi survey, the market expects the benchmark rate to remain unchanged for the rest of this year and in 2027. However, opinions are divided on whether the next move will be a cut or a hike.
MONTHLY DATA
In June alone, consumer prices fell 0.27%, according to non-seasonally adjusted figures, compared with economists' expectations of a 0.13% decline.
The closely watched core index, which strips out some volatile food and energy prices, rose 0.24% during the month, below a 0.31% market forecast.
(Reporting by Aida Pelaez-Fernandez and Michael Susin; Additional reporting by Noe Torres; Editing by Chizu Nomiyama and Kevin Liffey)
