Mexico’s inflation accelerated more than expected in April, although it remained within the central bank’s target range, likely keeping an interest rate cut of just half a percentage point by the Bank of Mexico (Banxico) on the table next week.
Annual inflation stood at 3.93 percent, above the median estimate of 3.9 percent by economists surveyed by Bloomberg and the 3.8 percent estimate in March. Core inflation, which excludes volatile items such as food and fuel, rose to 3.93 percent from 3.64 percent the previous month.
Banxico targets inflation of 3 percent, plus or minus 1 percentage point. It has been cutting interest rates, and its next decision is scheduled for May 15. Analysts, according to a Citi survey released Tuesday, expect another half-point cut.
Mexico narrowly avoided a technical recession in the first quarter of this year, with gross domestic product (GDP) growing 0.2 percent in the first three months of 2025 compared to the fourth quarter of 2024, driven by a surge in the agricultural sector that offset weakness in the services and industrial sectors.
Donald Trump’s intermittent tariff policies have raised concerns about whether investors will avoid Mexico this year. Some companies are boosting investments in everything from shipping routes to television programs, but others are wondering what Mexico’s exports to the United States will look like next year.
In the survey by Citi’s research unit, analysts forecast inflation in Mexico to close out 2025 and 2026 at 3.8 percent. They also forecast GDP growth of 0.1 percent this year and 1.5 percent next year.
Inflation Rises in Mexico
The core inflation index rose 3.93 percent, its highest level since August 2024.
In merchandise, the increase was 3.38 percent, a level not seen since May 2024, and in services, the increase was 4.56 percent, a figure higher than the March figure of 4.35 percent.
The services sectors with the highest increases were education (tuition), with an annual increase of 5.86 percent, and housing, with a 3.64 percent increase.
On the merchandise side, the largest increase was observed in food, beverages, and tobacco, with an annual increase of 4.42 percent.
On the other hand, the non-core index stood at 3.76 percent, a figure below the previous month’s 4.16 percent.
Domestically, agricultural prices slowed to 4.13 percent, while energy and government-authorized tariffs stood at 2.99 percent, a higher level than the previous month.
For Alberto Ramos, Goldman Sachs’ chief economist for Latin America, the recent inflation figures support the continuation of the monetary policy rate normalization cycle, but they also show that the battle to bring inflation back to target is far from over.
Source: elfinanciero
