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In Mexico, the consumer prices increased to 5.26 percent in June 2008 which is the highest inflation rate since November 2004. In May 2008, the inflation rate in Mexico was 4.95 percent.
Many investors think that the central bank in Mexico will increase the interest rate in the coming weeks as the peso is fixed at 0.33 percent to 10.304 per dollar. These thoughts were brought to light when Mexico’s central bank increased its benchmark interest rate by a quarter percent point to 7.75 percent towards the end of June and this sent food prices spiraling upwards. This was the first increase since October 2007 when the central bank of Mexico increased the overnight lending rate by a similar amount due to increasing consumer prices.
In addition, the Mexican government has been steady increasing the price of gasoline since April 2008 despite having massive subsidies to protect consumers from rising international oil prices.
Mexico is feeling the pinch of inflation as its biggest trading partner is the United States which is also seeing a slowing of its economy and weakening growth.
So far, Mexico’s economy is proven to be tougher than the slowdown that has hit the United States rather adversely. But the fact remains that Mexico’s inflation rate of 5.26 percent is much higher than the country’s long-term target of 3 percent.
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The US inflation rate last year was the highest in 17 years because of increasing costs of oil and food. This in turn pushed the prices up and for 2007, the consumer prices increased by 4.1 percent, which is a sharp rise compared to the 2.5 percent increase in 2006. 
