Mexico inflation eases to 3.12% in July, lowest since May 2020
Headline inflation stayed within Banxico's target range as the central bank held rates at 6.50% and signaled price pressures should keep easing, though more slowly than previously expected.
Mexico's annual inflation rate slowed to 3.12% in July from 3.37% in June, its lowest level since May 2020 and in line with market expectations, keeping price growth within Banxico's 3% target range of plus or minus 1 percentage point. Consumer prices rose 0.03% from the previous month, also matching forecasts. The data came a day after Banxico held its benchmark interest rate at 6.50%, extending a pause that began in June. The central bank said both headline and core inflation are still expected to decline over its forecast horizon, but at a slower pace than previously anticipated, with headline inflation now expected to converge to 3% in the fourth quarter of 2027. Core inflation, which strips out some volatile food and energy prices, reached 3.95% in the 12 months through July and rose 0.23% on the month, slightly above economists' expectations of 3.94% and 0.22%. Pantheon Macroeconomics' chief Latin America economist Andres Abadia said disinflation remains on track, but the final stage is likely to be gradual, adding that the report supports Banxico's decision to remain on hold.
- Benchmark interest rate: The main policy rate a central bank sets to influence borrowing costs, inflation and economic activity.
- Core inflation: An inflation measure that excludes some volatile items, such as food and energy, to show underlying price pressures.
- Disinflation: A slowdown in the pace of price increases, meaning inflation is still rising but at a lower rate.