Service Costs, Food Inflation Drive Mexico’s Price Pressures

In the first half of November 2025, headline inflation in Mexico rose, driven by higher prices for basic services, food consumed outside the home, and everyday consumer products such as tomatoes. Additionally, analysts warn that the new tariffs imposed on sugar imports could put further pressure on consumers.

According to INEGI, consumer inflation, measured through the National Consumer Price Index (INPC), recorded a biweekly increase of 0.47%, while the annual rate reached 3.61%. This reflects a rise in prices compared with the second half of October, when inflation stood at 3.5%. However, these levels remain within Banxico’s target range of 3% ± 1 percentage point.

Grupo Monex notes that Mexico’s inflation figures present a mixed picture. Although headline inflation remains within Banxico’s variability range, this is mainly due to the performance of the non-core component, which has averaged 2.99% annually so far this year. This figure is low compared with last year, when inflation was influenced by weather-related phenomena that drove up prices. In contrast, core inflation, which provides a more stable view of inflation trends, reached its highest level in more than a year and a half, despite a context of weaker economic activity.

Within INEGI’s report, inflation in the services sector was identified as the main source of pressure on household budgets during the first 15 days of November. The 20.70% increase in electricity prices had the greatest impact on consumers following the end of government subsidy programs in 18 cities. Public transportation costs also rose, showing a biweekly increase of 4.32%.

Regarding food, tomato prices increased 3.98%, while the cost of prepared foods sold in lunch counters, diners, sandwich shops, and taco stands rose 0.47%, and restaurant prices increased 0.51%, weighing on household finances. In contrast, during the same period, there were declines in the prices of alcoholic beverages: table wine fell 9.43%, brandy 8.84%, rum 9.78%, and tequila 6.01%. Similarly, potatoes and other tubers saw a 2.61% price drop.

Analysts attribute the decreases in alcoholic beverages to the start of the seasonal discount period. However, they caution that food prices may rise following the implementation of new tariffs on sugar imports, a measure that came into effect on Tuesday.

The Jalisco Food Industry Chamber (CIAJ) anticipates that the impact will extend to subsectors such as confectionery, chocolate, bottled beverages, juices, dairy, baking, pastries, and flavorings, all of which rely on sugar as a key input. Currently, sugar sells for between MX$15/kg (US$0.82/kg) and MX$15.10/kg, but the industry estimates it could reach MX$20/kg in the coming weeks if supply pressures continue.

Fernando Acosta, President, CIAJ, explained that an adjustment in the domestic market is inevitable: if sugar prices rise, final consumer prices will also increase. He noted that with the tariffs in place, Mexico will no longer receive cheaper sugar from abroad, forcing the industry to depend solely on domestic production.

Acosta warned that the situation could worsen starting in January, when a tax on sugary drinks takes effect. Combined with the higher cost of sugar, this new levy would lead to an additional increase in the final prices of products widely consumed by the population.

The tariff measure imposes duties ranging from 156% to 210.44% on sugar imports from World Trade Organization (WTO) member countries, except for those with which Mexico has specific trade agreements. With this measure, the government aims to balance the market and prevent international oversupply from undermining the profitability of domestic producers.

However, food industry leaders warn that higher input costs will ultimately be passed on to consumers, potentially creating further pressure in a sector that relies heavily on sugar as a raw material.