Mexico’s annual headline inflation rate rose above 4% in February, exceeding the Bank of Mexico’s 2-4% target range.

The national statistics agency INEGI reported Monday that the annual headline rate was 4.02% last month, up from 3.79% in January.

The rate — the highest since last June — exceeded the 3.94% consensus forecast of analysts surveyed by Bloomberg.

INEGI reported that month-over-month inflation was 0.50% in February, while the annual core rate, which excludes volatile food and energy prices, was 4.50%, down from 4.52% in January.

The Bank of Mexico (Banxico) targets 3% annual inflation, give or take one percentage point.

At its Feb. 5 monetary policy meeting, the central bank’s board voted to maintain Banxico’s benchmark interest rate at 7%. The bank said in a statement that the board took into account “the need to continue evaluating the impact of the fiscal adjustments implemented at the beginning of the year, as well as the behavior of the exchange rate, the weakness of economic activity, and the level of monetary restriction [already] implemented.”

Between August 2024 and December 2025, Banxico lowered its benchmark interest rate after 12 consecutive monetary policy meetings. The bank’s interest rate declined from 11% to 7% in the period.

The Banxico board’s next monetary policy meeting will be held on March 26.

On social media on Monday morning, Banco Base’s director of economic analysis, Gabriela Siller, wrote that cutting the interest rate now would be a “serious monetary policy mistake.”

“Inflation is back above 4% and there are many risks that it will continue to rise,” she wrote.

She cited inflationary pressures on energy due to the war in the Middle East and on goods “due to the 2026 economic package” as new risks.

For his part, Marco Oviedo, a senior strategist at investment firm XP Investimentos, believes that Banxico could cut its benchmark interest rate after this month’s monetary policy meeting.

“Core inflation came in line with expectations, confirming no evidence [of an impact on inflation] from Asian tariffs at this stage,” he wrote in a note to clients.

“This would be sufficient for the board to start discussing a potential cut in the March meeting, as recent market volatility should be perceived as transitory,” Oviedo said.

Banxico governor Victoria Rodríguez said last month that tariffs on products from China and other countries with which Mexico doesn’t have free trade agreements hadn’t affected prices. Those tariffs — as high as 50% on some goods — took effect on Jan. 1.

Rodríguez also said that recent tax increases on products including soft drinks and cigarettes haven’t had a significant impact on inflation.

Fruit and veg prices up almost 10% annually 

INEGI reported that prices for fruit and vegetables were 9.88% higher in February than a year earlier. That increase was the highest of any category monitored by INEGI.

Agricultural products more broadly were 4.50% more expensive in February than the same month of 2025. The increase was tempered by annual inflation of just 0.98% for meat.

INEGI reported that annual inflation for processed food, beverages and tobacco was 6.20% in February, while non-food goods were 3.13% more expensive than a year earlier. Year-over-year inflation for services was 4.45%, while energy prices, including those for electricity and gasoline, rose 0.89% annually.

Month-over-month price changes 

INEGI reported that limes — an extremely popular product in Mexico — were 25.97% more expensive in February than in January. Month-over-month inflation for limes was also above 20% in January.

Tomato prices increased 22.51% in February compared to January, while potatoes and other root vegetables were 20.86% more expensive.

Green tomatoes were 18.89% more expensive in February than in January, while banana prices rose 10.79%. Smokers paid 2.27% more for cigarettes in February.

Siller said that month-over-month inflation for fruit and vegetables collectively, at 4.94%, was the largest increase for any February since 1992.

INEGI also reported that prices for some products fell in February compared to the previous month. Onions were 8.40% cheaper last month than in January, while prices for serrano peppers and zucchinis fell 6.76% and 4.70%, respectively.

Among the other products whose prices fell in February were eggs (-2.63%); LP gas (-1.83%); beans (-1.81%); deodorant (-1.41%); pork (-1.38%); and chicken (-1.29%).

Among Mexico’s 32 federal entities, Veracruz recorded the highest month-over-month inflation rate in February (0.80%), while Tamaulipas recorded the lowest (0.12%), INEGI said.

With reports from El Economista, Bloomberg and Milenio