Bloomberg News

Mexico Has No Inflation Concerns ‘Whatsoever,’ Meade Says

July 03, 2012

Mexico’s finance minister said his government has no concerns about inflation “whatsoever” even after the pace of consumer-price increases exceeded the government’s target range in the first half of June.

Mexico’s inflation expectations are “very well-anchored” in the short, medium and long-term and core inflation is very well-behaved, Finance Minister Jose Antonio Meade said in an interview today in Mexico City.

Prices jumped 4.3 percent in the 12 months through mid- June, leading economists to raise their year-end inflation forecast to 3.81 percent in a survey by the central bank published July 2. A month earlier analysts were forecasting inflation of 3.65 percent. The central bank targets inflation of 3 percent, plus or minus 1 percentage point.

Mexico’s economy grew 4.6 percent in the first three months from the year earlier, the fastest pace in six quarters, fueling demand that is adding to inflation pressures. A 9.5 percent tumble by the peso against the dollar in May, the worst performance among major currencies tracked by Bloomberg, is also weighing on the cost of imports.

“We have no inflationary concerns whatsoever,” Meade said. The pass-through to inflation from the peso’s recent weakness “has been very minor if at all.”

Meade said that he has no plan to change his 3.5 percent 2012 growth forecast at this time. While he still sees the possibility of surprises pushing growth “marginally higher” than estimated, he doesn’t see any possibility of it reaching 4.25 percent, which is the upper limit of the central bank’s forecast range from May 16.

Pemex Budget

Meade said that investment in state-owned oil company Petroleos Mexicanos equivalent to 2 percent of gross domestic product would be a “reasonable amount” for next year’s budget.

In addition, it would be a “good signal” if Mexico moved toward a balanced budget next year from this year’s deficit of 0.4 percent of GDP, he said. The government has until Dec. 15 to present the 2013 budget, later than the usual Sept. 8 deadline because a new president will replace Felipe Calderon on Dec. 1, Meade said. Preliminary results show Enrique Pena Nieto of the opposition Institutional Revolutionary Party won the July 1 election.

Meade said that it is too early to say whether he would stay on if asked as finance minister in the upcoming administration.

Sergio Luna, chief economist for Citigroup Inc.’s Banamex unit, said Meade could potentially stay on at his post.

While Meade didn’t rule out the possibility, the finance minister said he hadn’t spoken to Pena Nieto’s team and that his “central scenario” is that he would leave government.

Still, “at this stage it’s difficult to rule out anything,” he said.

To contact the reporters on this story: Nacha Cattan in Mexico City at; Ken Fireman at

To contact the editor responsible for this story: Joshua Goodman at

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