Mexico’s annual headline inflation rate declined for a seventh consecutive month in August to reach its lowest level since February 2021.

The national statistics agency INEGI reported Thursday that the annual headline rate was 4.64% in August, down from 4.79% in July.

The annual core inflation rate, which excludes volatile food and energy prices, was 6.08%, the lowest level since December 2021.

The headline rate was slightly higher than the forecast of analysts surveyed by Reuters and Citibanamex, while the core rate was slightly lower.

The former rate remains above the Bank of Mexico’s target of 3% inflation, with tolerance for one percentage point in either direction.

The month-over-month increase on the National Consumer Price Index, which measures headline inflation, was 0.55%, INEGI reported.

Headline inflation peaked last year at 8.7% and was just below 8% in January. But high interest rates have helped drive inflation down this year. The central bank’s key rate has been set at a record high 11.25% since March

Andrés Abadia, chief Latin America economist at Pantheon Macroeconomics, said that the decline in inflation is “thanks to a delayed effect from more restrictive financial conditions” as well as the strong performance of the Mexican pesos in recent months (if not recent days) and lower prices for raw materials.

“Overall, the disinflation story in Mexico is continuing, despite a resilient labor market and solid wage growth,” Abadia said.

The federal government has implemented its own anti-inflation plan in conjunction with the private sector, but whether it has contributed to the steady decline in inflation seen this year is a matter for debate.

INEGI data shows that processed food and fruit and vegetables were among the key drivers of inflation in August.

Processed foods, beverages and tobacco were 8.44% more expensive last month than they were in August 2022, while fruit and vegetable prices were up 8.15% in annual terms.

The cost of non-food goods rose 5.03% from a year earlier, services were 5.15% more expensive, housing was 3.49% dearer and meat prices ticked up by 0.47%.

Energy costs, including those for gasoline and electricity, declined 2.68% compared to August 2022.

With reports from El Financiero and El Economista