Mexico inflation slows to six-year low as Banxico holds rates
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FILE PHOTO: A man walks past a market stall selling fruits and vegetables, in Ciudad Juarez, Mexico, April 15, 2026. REUTERS/Jose Luis Gonzalez/File Photo
Aug 7 (Reuters) - Mexico's annual inflation slowed in July to its lowest level in more than six years, data from statistics agency INEGI showed on Friday, a day after the central bank held interest rates steady even as it expects price pressures to continue to ease.
• Annual inflation in Latin America's second-largest economy hit 3.12% last month, INEGI said, down from 3.37% in June and the lowest since May 2020.
• The reading matched expectations from economists in a Reuters poll and remained within the Bank of Mexico's (Banxico) target range of 3%, plus or minus one percentage point.
• The data came after Banxico on Thursday kept its benchmark interest rate at 6.5%, extending a pause that began in June, saying that both headline and core inflation were still expected to decline over its forecast horizon but at a slower pace than previously anticipated.
• Headline inflation is expected to converge to 3% in the fourth quarter of 2027, according to the bank.
• "The key story here is that disinflation remains on track, but the final stage is likely to prove gradual," Pantheon Macroeconomics' chief Latin America economist Andres Abadia said in a note to clients.
• "Nothing in today's report changes our policy outlook. Inflation continues to evolve broadly in line with Banxico's expectations, supporting the board's decision to remain on hold," he added.
• According to INEGI, consumer prices in July rose 0.03% from the previous month, matching economists' forecasts.
• Core inflation, which strips out some volatile food and energy prices, hit 3.95% in the 12 months through July. On a monthly basis, core prices rose 0.23%. Economists in the Reuters poll had expected readings of 3.94% and 0.22%, respectively.
(Reporting by Gabriel Araujo in Sao Paulo. Editing by Mark Potter)
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