Mexico’s Inflation Eases, Boosting Hopes of Banxico Rate Cut

Consumer inflation in Mexico continued to ease in the first half of March, aligning with the target range set by Mexico’s Central Bank (Banxico) at 3.67%, according to data from the National Institute of Statistics and Geography (INEGI).

The National Consumer Price Index (INPC) rose 0.14% in the first 15 days of the month, bringing annual inflation to 3.67%. This decline from previous levels keeps inflation within Banxico’s target of 3% ±1 percentage point.

The data bolsters expectations that Banxico, led by Governor Victoria Rodríguez Ceja, will proceed with another interest rate cut at its upcoming meeting. Analysts project a reduction of 50 basis points, lowering the benchmark interest rate to 9%. INEGI’s report showed a notable decline in fruit and vegetable prices, which had previously been volatile. In early March, these prices fell by 3.67% annually, while livestock product prices rose by 8.93%, resulting in an overall agricultural inflation rate of 4.22%.

Energy products and government-regulated tariffs experienced inflation of 2.96% during the same period, contributing to a 3.89% annual rate for the non-core index. Core inflation, which excludes volatile items like food and energy, recorded an annual rate of 3.56%. Within this category, merchandise prices increased by 2.92%, while service prices rose by 5.57%.