Mexico’s inflation eased in the first half of July, returning to the central bank’s target range and boosting expectations for further interest rate cuts in the country’s ongoing monetary easing cycle.
According to data released Thursday by the national statistics agency, consumer prices rose 3.55% year-over-year through mid-July, down from 4.51% in the previous month, and below the 3.64% forecast by economists surveyed by Reuters.
President Claudia Sheinbaum commented during her morning press briefing that the drop in inflation “gives the Bank of Mexico room to continue lowering interest rates.”
The Bank of Mexico (Banxico), which targets inflation at 3% ±1 percentage point, has already cut its key rate by 50 basis points in June—its third consecutive cut of that size—bringing it to 8.5%, the lowest level since August 2022.
In the first two weeks of July, consumer prices rose by just 0.15%, well below the 0.27% increase expected by markets.
Analysts at Monex called the figures surprising, noting this was the lowest mid-July inflation in over a decade, though they cautioned that core inflation remains a concern.
The core inflation index, which excludes volatile items like food and energy, rose 0.15% during the same period—down from 0.22% in June—with a 12-month core rate of 4.25%.
Due to this underlying price pressure, Monex expects Banxico to slow the pace of easing, predicting a 25 basis point cut to 7.75% at the bank’s upcoming August 7 meeting.
