Inflation in Mexico eased more than expected in December, falling to its lowest year-end annual rate in five years.
National statistics agency INEGI reported on Thursday that the annual headline rate was 3.69% last month, down from 3.80% in November and below a 3.75% consensus forecast of analysts surveyed by Bloomberg.
La inflación en México hila 6 meses debajo de 4%, siendo la racha más larga desde junio del 2019 a julio del 2020, cuando la economía mexicana se encontraba en recesión. pic.twitter.com/VIEVeUNUhU
— Gabriela Siller Pagaza (@GabySillerP) January 8, 2026
The last time Mexico’s end-of-year inflation rate was lower was in December 2020, when INEGI reported a 3.15% reading.
Month-over-month inflation was 0.28% last month, the lowest December rate since 2012.
Mexico’s core inflation rate — which doesn’t consider volatile food and energy prices — was 4.33% in December, down from 4.43% in November.
With an annual headline reading of 3.69% in December, inflation in Mexico was 0.10 percentage points higher at the end of the year than in January.
The headline rate peaked last year at 4.42% in May, while the lowest rate was 3.51% in July, the start of a six-month streak of readings below 4%.
The Bank of Mexico targets 3% inflation, but tolerates a 2-4% range. Even though headline inflation remained above its 3% target throughout 2025, the central bank lowered its benchmark interest rate after each of its eight monetary policy meetings last year.
The bank’s key rate is currently set at 7%, down from 10% at the start of 2025.
Inflation data in detail
INEGI reported that prices for processed food, beverages and tobacco increased 5.22% annually in December, while non-food goods were 3.51% more expensive.
Services were 4.35% more expensive than a year earlier, while meat prices increased 5.76% annually.
Thanks to the easing of drought conditions in Mexico, fruit and vegetables were 5.62% cheaper last month than in December 2024.
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Meanwhile, energy prices, including those for electricity and gasoline, rose 2.19% annually in December.
On a month-over-month basis, air travel was 19.89% more expensive in December, which is indicative of increased demand for flights during the end-of-year holiday season.
The spike in green tomato prices was even higher. The fruit, a key ingredient in Mexico’s ubiquitous salsa verde, was 27.01% more expensive last month than in November.
Among the products whose prices fell in December compared to the previous month were papaya (-10.77%) and eggs (-4.11%).
The inflation outlook
The Bank of Mexico is predicting that inflation will converge to its 3% target in the third quarter of this year and remain at that level in the fourth quarter of 2026 and throughout 2027.
However, the median forecast of 35 banks, brokerages and research organizations polled by Citi México for its latest Expectations Survey is that Mexico’s annual headline inflation rate will be 4% at the end of 2026.
In a post to X on Thursday morning, Banco Base’s director of economic analysis, Gabriela Siller, wrote that inflation in Mexico could rise above 4% this year due to four factors:
- The increase of the minimum wage, which rose 13% to 315 pesos (US $17.50) per day on Jan. 1.
- The implementation of (new and higher) tariffs on imports from countries with which Mexico doesn’t have trade agreements, including China.
- The increase of the IEPS excise tax on sugary drinks.
- The 2026 FIFA World Cup, which Mexico will co-host with the United States and Canada in June and July.
With reports from El Economista and La Jornada
