Mexico's consumer price index (CPI) accelerated to an annual 3.57pc in August, as price disinflation in produce offset acceleration in consumer goods and services inflation.
The index quickened from 3.51pc in July — the lowest annual headline inflation rate since December 2020 — ending a two-month deceleration from 4.42pc in May.
The August CPI result published by statistics agency Inegi met exactly the median estimate in Citi Research's latest analyst survey.
The result maintains CPI within the central bank's target inflation range of 2-4pc. And with this, Mexican bank Banorte forecast the central bank will issue an additional quarter-point cut to its target interest rate to 7.5pc on 25 September to end the current rate cutting cycle at 6.5pc in the first quarter of 2026.
"Much of the decline was explained by positive base effects in both agriculture and energy, which now is reversing," Banorte said, adding the outlook appears more positive with significant rainfalls forecast to extend into October.
Core inflation, which excludes volatile food and energy prices, was unchanged from July at 4.23pc, holding for a third consecutive month above the 4pc level. Within the core, consumer goods inflation accelerated to 4.05pc in August from 4.02pc in July, while services eased to 4.40pc from 4.44pc the previous month.
Within services, the housing component sped to 3.44pc in August from 3.42pc in July.
Non-core inflation accelerated to 1.38pc in August, after emphatically slowing to 1.14pc in July from 4.33pc in June, with fruit and vegetable prices contracting by 8pc in August from a year prior.
The decline is linked to cooler, wetter weather this year, with 8.1pc of Mexico experiencing moderate to extreme drought conditions in mid-August compared with 34pc a year earlier, according to the national water authority Conagua.
Annual energy inflation in August slowed to 0.29pc from 0.78pc in July. Mexican president Claudia Sheinbaum in late August signed an agreement with fuel retailers to renew the voluntary price cap of Ps24/l ($4.81/USG) on gasoline, extending the policy for six more months.
On a monthly basis, headline CPI eased to 0.06pc in August compared with 0.27pc in July. Core prices slowed to 0.22pc in August after a 0.31pc reading in July.
