Mexico's consumer price index (CPI) decelerated to an annual 3.51pc in July, as slowing produce and energy prices offset acceleration in consumer goods prices.
The index slowed from 4.32pc in June, marking the second month of easing prices, and marks the lowest annual headline inflation rate since December 2020.
The result moves CPI back into the central bank's target inflation range of 2-4pc, reinforcing analyst consensus of a quarter-point rate cut to 7.75pc later Thursday after the bank's policy meeting..
The July CPI result published by statistics agency Inegi came in just above the 3.52pc median estimate of analysts surveyed by Citi Research.
Mexican bank Banorte said the July result was largely due to beneficial base effects, "most evident in agriculture", but noted "adverse" base effects would likely drive an upward trend in the CPI readings through the end of 2025.
Core inflation slowed to 4.23pc in July from4.24pc in June, holding for a second consecutive month above the 4pc level. Within the core, consumer goods inflation accelerated to 4.02pc in July from 3.91pc in June, while services eased to 4.44pc from 4.62pc.
Within services?, the housing component slowed to 3.42pc in July from 3.5pc in June.
Non-core inflation slowed emphatically to 1.14pc in July from 4.33pc in June, with fruit and vegetable prices contracting 12.1pc in July from a year prior.
The decline is linked to cooler, wetter weather, with 10pc of Mexico experiencing moderate to extreme drought conditions in mid-July compared with 40pc a year earlier, according to the national water authority Conagua.
Annual energy inflation in July slowed to 0.78pc in July from 2.97pc in June. Mexican president Claudia Sheinbaum said Thursday the administration was renewing the agreement with fuel retailers for a voluntary price cap at Ps24/l ($4.85/USG).
On a monthly basis, headline CPI eased to 0.27pc in July compared with 0.28pc in June. Core prices slowed to 0.31pc in July after a 0.39pc reading in June.
