Mexico Inflation Extends Decline to Four Fortnights, Hits 4.11% Annually

Mexico City — Mexico’s annual inflation rate moderated to 4.11% in the first half of May, marking the fourth consecutive decline, the National Institute of Statistics and Geography (INEGI) reported Thursday.

The consumer price index (CPI) slowed due to lower electricity prices and a drop in some agricultural products, though tomatoes and liquefied petroleum gas (LPG) continued to rise, albeit at a slower pace.

The latest reading is down from 4.63% in the first half of March, which was the highest point this year. The figure came in slightly below analyst expectations.

Despite the improvement, inflation has now remained above the Bank of Mexico’s target range of 3% plus or minus one percentage point for six consecutive fortnights.

Core inflation, which strips out volatile items, rose 0.13% during the period, driven by a 0.09% increase in goods and a 0.17% rise in services. Non-core inflation fell 1.14%, reflecting a 0.53% drop in energy prices and a 1.64% decline in government-administered tariffs, INEGI said.

Electricity prices fell 17.88% due to seasonal adjustments in 11 cities, while tomatillo prices dropped 18.59% and serrano chili fell 14.28%. Tomato prices, however, rose 5.59%, detergents increased 2.68%, and LPG edged up 1.81%.

Analysts at Banamex noted that inflation spiked early in the year due to tax increases on food and agricultural prices, but they expect a gradual downward trend, tempered by tariffs and offset by currency appreciation and economic growth.

Monex said the moderation was mainly due to non-core inflation, which reflected fewer supply shocks in agricultural products, but warned that persistent inflationary pressures remain significant.