Inflation Moderates for Second Straight Month

Mexico's general annual inflation fell to 3.94% in May, marking the second consecutive monthly decline and landing squarely within Banco de México's target range.

The figure, released by Mexico's National Institute of Statistics and Geography (INEGI), came in below the 4.03% forecast from analysts surveyed by Reuters. According to Infobae, the National Consumer Price Index (INPC) dropped 0.21% from April, settling at 145.527 points. This marks the second straight month of easing inflation, a significant development for Mexican households watching their daily expenses and policymakers considering interest rate adjustments.

Core Inflation Hits Lowest Point Since May 2025

Core inflation, which strips out volatile components, slid to 4.19% annually. This represents the lowest reading since May 2025 and marks four consecutive months of moderation. Seasonal and agricultural factors drove the monthly decline:

Upward Pressures Persist in Services

Counterbalancing these declines, some service categories continued climbing, according to Excélsior. Education costs rose 5.94% annually, while restaurants and lodging jumped 6.69% annually, both well above the general average. These segments have proven stubbornly resistant to moderation.

The reading remains within Banco de México's target band of 3% plus or minus one percentage point, though core inflation still sits above the central bank's midpoint objective.

What's Next for Interest Rates

The data bolsters expectations that Banxico will hold its benchmark rate steady at 6.50% for an extended period. The release of monetary policy decision minutes and early-June inflation readings will provide clearer signals about price trends in the second half of the year.

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