Mexico’s Inflation Rises to 4.42%, Above Banxico’s Target Range

Mexico’s inflation hit a six-month high in May, reaching 4.42%, according to the latest Consumer Price Index report released Monday by the National Institute of Statistics and Geography (INEGI).

The annual inflation rate rose to 4.42% last month, matching April's figure and marking the highest level since November 2023, when it reached 4.55%. The rate exceeded private sector expectations, which had projected 4.37%, according to a Citi survey of 33 banks, brokerages, and research firms.

Even the most pessimistic forecasts, from Banorte and Bancoppel, underestimated the figure, both predicting a rate of 4.41%.
 

The inflation rate remains outside Mexico’s Central Bank target range of 2% to 4%, complicating efforts to return to the central bank’s 3% goal. The increase comes ahead of the bank’s next monetary policy announcement, set for June 26. Analysts widely anticipate a 50-basis-point cut to the benchmark interest rate, potentially reducing it from 8.5% to 8%.

INEGI tracks price changes in approximately 300 goods and services across Mexico’s 55 largest cities. In May, avocados saw the steepest price increase, up 35.3%, followed by papayas at 28.6% and green beans at 27%.

In contrast, serrano chiles recorded the most significant price drop, down 41.8%, followed by sugar at 19.1% and tomatoes at 16.3%.

Despite the inflation data, the Mexican peso remained stable, closing at MX$19.07 per US dollar in wholesale trading, according to Bloomberg. Earlier in the day, the exchange rate touched 19.05, its strongest level since Aug. 23, 2023.