Mexico's inflation slowed to an annual 3.12pc in July, the lowest in six years, led by contracting agriculture prices and easing in core inflation.
The consumer price index (CPI) eased from an annual 3.37pc in June and marked a fourth consecutive month of deceleration from 4.59pc in March, according to statistics agency Inegi.
Inflation came in close to analyst forecasts, with Mexican bank Banorte's consensus survey forecast at 3.11pc.
The bank said inflation, its lowest since early 2020, "has likely already" hit its lows for the year and forecasts it to accelerate in the fourth quarter.
July's slower headline rate was mainly fueled by the more volatile non-core index of prices, which slowed to an annual 0.29pc in July, mainly because agricultural goods prices contracted by an annual 3.34pc in July.
Agricultural prices in Mexico have been supported by average rain and temperatures this year.
However, in its August 3 update, NOAA's Climate Prediction Center confirmed the development of a strong El Nino climate phenomenon to reach its peak in the winter.
Core inflation, which excludes volatile food and energy prices, slowed to 3.95pc in July from 4.03pc in June, marking a sixth consecutive month of deceleration and slowing to within the central bank's 2-4pc inflation tolerance band around the fixed 3pc target rate.
Services remained the main source of upward pressure at 4.36pc in July, though easing from 4.49pc in June. Housing inflation held unchanged at 3.62pc, its highest level since April 2025, while consumer goods inflation slowed to 3.52pc in July, marking a third month of declines.
Mexico's energy price index edged lower to 1.16pc in July from 1.39pc in June, supported by the government caps on regular gasoline and diesel retail prices to mitigate volatility stemming from the US war with Iran.
The government policy will remain key to stability in energy prices, said Banorte, though the outlook for fuel prices has improved "in recent trading" helped in part by OPEC+'s decision to rescind voluntary production cuts.
On a monthly basis, the CPI increased 0.03pc in July after a 0.27pc contraction in June.
