The National Institute of Statistics and Geography (INEGI) reported Thursday that Mexico’s inflation rate stood at 3.51 percent annually in July. Economists polled by Reuters had expected it to come in at 3.53 percent, marking the lowest reading since December 2020. The July figure also fell below June’s 4.32 percent reading. Monthly consumer prices rose 0.27 percent from June to July.
Core inflation, which excludes volatile food and energy items, grew 0.31 percent month on month and reached 4.23 percent year on year. The non-core index, covering agricultural goods and regulated rates, slowed to 1.14 percent annually. Together, these measures illustrate a mixed pace of price adjustments across categories.
Mexico inflation rate July 2025
Underlying components showed varied annual shifts. Merchandise prices climbed 4.02 percent year on year, while services costs rose 4.44 percent over the same period. This divergence highlights stronger pressure in service sectors compared with goods markets.
Several products recorded notable price swings in July. Lettuce and cabbage costs jumped 17.44 percent annually, reflecting seasonal and supply factors. Nopales prices increased 13.04 percent year on year, driven by strong domestic demand. Air transport fares also climbed 8.9 percent over the past year, mirroring higher fuel and operational costs.
Factors behind the slowdown
Despite these spikes, overall inflation remains on a downward trajectory. Inflation closed 2024 at 4.21 percent, after peaking at 4.66 percent in 2023 and even higher readings in prior years. It reached 7.82 percent in 2022 and 7.36 percent in 2021, the highest in two decades. The current pace marks the lowest annual rate since December 2020 and the slowest in nearly five years.
Economists see this trend as support for continued monetary easing. “The latest inflation data paves the way for Banxico to deliver the clearly-signaled 25-basis-point cut, to 7.75 percent,” said Capital Economics emerging markets economist Kimberley Sperrfechter. The Bank of Mexico cut its benchmark rate by 50 basis points in June, bringing it to 8 percent, and will announce its next move later today.
Looking ahead, analysts expect a more gradual policy path. With core inflation still above the central bank’s 3 percent target and economic growth tepid, Banxico’s board is likely to weigh further cuts carefully. If inflation continues to decelerate, markets anticipate additional rate reductions through year-end, bolstering credit conditions without risking renewed price pressures.
