Consumer prices rose 3.57% through August, remaining within the central bank’s target range for the second month in a row, according to data released by Mexico’s national statistics agency INEGI.

After easing in June and July, the consumer price index (INPC) accelerated by 0.06% from July to August, though still roughly in line with market expectations. 

In August 2024 — the final month of the López Obrador administration — monthly inflation was a mere 0.01% while annualized inflation sat at 4.99%.

The increase this August was driven by rising prices in several key consumer categories, including serrano chilies (+34.94%), green tomatoes (+16.71%), onions (6.33%) and beef (+0.67%). Also contributing were higher costs for housing and utilities (0.27%) and price hikes in services such as universities (+1.34%) and small restaurants — eateries known locally as loncherías, fondas and taquerías (+0.63%).

In contrast, prices for avocados (–7.36%), chicken (–4.62%), bananas (–5.23), tomatoes (–11.46%), air freight (–9.76%) and movie theaters (–11%) declined considerably.

Data showed that core inflation — which excludes volatile items like food and energy prices to assess underlying, long-term inflation trends — climbed 0.22% in August (just as it did in August a year ago), remaining stable at 4.23% on the year. Analysts had forecast an annual core inflation rate of 4.21%.

The inflation rebound in August not only indicates persistent underlying price pressures, as noted by Moody’s analyst Alfredo Coutiño, but also highlights the delicate balance between controlling inflation and stimulating the economy as Mexico continues its post-pandemic recovery.

Even so, the latest data suggests that inflation remains within the Bank of Mexico’s target range of 3% (plus or minus 1%). This suggests the central bank may proceed with a 25-basis-point rate cut at its next meeting on Sept. 25, continuing its monetary easing strategy by lowering the benchmark rate to 7.5%.

In the 2026 budget proposal submitted by the Finance Ministry late Monday, inflation for year-end 2026 was forecast at 3%. This would meet the target set by the Bank of Mexico, which projects inflation converging to the target in the third quarter of next year.

With reports from El Economista, La Jornada and El Financiero