(Bloomberg) – Mexican inflation accelerated more than expected in early May as food prices increased amid confinement with the coronavirus.

Consumer prices rose 2.83% from a year earlier, more than the median estimate of 2.51% in a Bloomberg survey, and above 2.21% in late April. The central bank has an annual inflation target of 3%, plus or minus one percentage point.

The central bank cut interest rates by half a point at its March, April and May meetings, raising borrowing costs to 5.50%. It is expected to cut another 50 basis points in June as the economy is projected to contract 7.6% this year, the biggest drop since 1932.

Faster inflation in early May is unlikely to halt the central bank’s easing cycle, although it decreases the likelihood of stronger bank action, according to Goldman Sachs.

Prices rose 0.3% from the previous two weeks, while economists had projected a 0.01% decrease, the National Institute of Statistics and Geography (Inegi) reported on its website on Friday. Inflation data has been collected virtually since April, as the country is taking steps to prevent the spread of the coronavirus.

Food and beverage prices increased 6.5% in early May from a year earlier, while fruit and vegetable prices advanced 19.2%. Energy and fuel costs decreased 13.4% in the same period due to the collapse of oil prices in the international market, but low octane gasoline increased 4.5% compared to two weeks earlier, after that global prices will recover slightly.

Base prices rose 0.24% from the previous two weeks, compared to a projection of a 0.12% increase in a Bloomberg survey.

On the other hand, Inegi also said on Friday that retail sales contracted 1.3% in annual terms, which compares with the median of analyst estimates surveyed by Bloomberg of -1%.

Original Note: Mexico Inflation Quickens More Than Expected on Food Prices (1)

bloomberg.com“data-reactid =” 28 “> For more articles like this, please visit us at bloomberg.com

Subscribe now to stay ahead with the most trusted business news source. “data-reactid =” 29 “> Subscribe now to stay ahead with the most trusted business news source.

© 2020 Bloomberg L.P.