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Mexico early-May prices fall 0.16% after central bank ends easing cycle

BY Reuters | ECONOMIC | 08:47 AM EDT

May 22 (Reuters) - Mexican consumer prices fell 0.16% in the first half of May, national statistics agency INEGI said on Friday, broadly in line with expectations of a 0.15% drop in a Reuters poll of economists.

* Annual inflation 4.11%, after 4.53% last month, vs economists' expectations of 4.13%

* Analysts had said seasonal electricity subsidies in some states would drive prices down

* Central bank targets inflation at 3%

* The bank cut benchmark rate on May 7 by 25 basis points to 6.5% and announced end of easing cycle that began early 2024

* Core price index, which strips out some volatile food and energy prices, up 0.13% vs 0.17% expected by economists

* Annual core inflation down on the month to 4.22% from 4.27% (Reporting by Gabriel Araujo in Sao Paulo; Editing by Kevin Liffey)

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In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.

Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.

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