Mexico Inflation Eases to 3.59%, Hits Central Bank’s Target

Mexico’s annual inflation rate slowed to 3.59% in January, reaching within the Central Bank of Mexico’s (Banxico) target range of 3% ± 1 percentage point, according to the National Institute of Statistics and Geography (INEGI).

The National Consumer Price Index (INPC) rose by 0.29% month-over-month, slightly below market expectations. Analysts surveyed by Reuters had projected inflation at 3.61%.

This marks the third consecutive month of declining inflation, strengthening expectations for Banxico to continue reducing interest rates in the coming months.

On Feb. 8, Banxico lowered its benchmark interest rate by 50 basis points to 9.50%, the fifth consecutive cut in its monetary easing cycle. Banxico Governor Victoria Rodríguez Ceja hinted at the possibility of another cut during the next policy meeting, despite global uncertainties, including Donald Trump’s return to the US presidency.

“We anticipate that the inflationary environment will allow us to continue cutting rates while maintaining a restrictive stance,” Rodríguez Ceja said. “We could consider a similar downward adjustment, and we expect more rate reductions throughout the year.”

Non-core inflation, which includes volatile items such as food and energy, was a major factor in January’s decline, dropping from 5.95% in December to 3.34%. Agricultural prices rose by just 0.56%, while fruits and vegetables saw a 7.73% year-over-year decline. Energy prices and government-regulated tariffs recorded an annual increase of 5.33%. Core inflation, which excludes volatile items, ticked up slightly, from 3.65% in December to 3.66% in January.