Mexico’s annual headline inflation rate increased in February compared to January, ending a three-month streak of declines.
The annual headline rate was 3.77% last month, up from 3.59% in January, according to the national statistics agency INEGI. Month-over-month inflation was 0.28%.
The uptick in annual inflation was expected: The 3.77% rate is on par with the consensus forecast of analysts surveyed by Reuters.
Despite the increase, headline inflation is still within the Bank of Mexico’s target range of 3% give or take one percentage point. An interest rate cut following the central bank’s next monetary policy meeting on March 27 — even a 50-basis-point one — remains a distinct possibility. The Bank of Mexico’s benchmark rate is currently set at 9.50% after a 50-basis-point cut on Feb. 6.
Gabriela Siller, director of economic analysis at Banco Base, said on X on Friday morning that the Bank of Mexico is expected to continue cutting its key interest rate in 2025 “to close the year at 8.5%.”
INEGI also reported on Friday that Mexico’s annual core inflation rate, which excludes volatile food and energy prices, was 3.65% in February, just below the 3.66% reading in January.
Con esto, se prevé que el Banco de México continúe con los recortes en la tasa de interés para cerrar el año en 8.5%.
— Gabriela Siller Pagaza (@GabySillerP) March 7, 2025
The uptick in annual headline inflation in February represented the first increase since October. When inflation declined for a third consecutive month in January, the annual headline rate fell to its lowest level in four years.
The latest inflation data comes a day after United States President Donald Trump announced he was suspending 25% tariffs on imports from Mexico covered by the USMCA free trade pact until at least early April. The U.S. government imposed the tariffs on Tuesday, prompting the Mexican government to prepare retaliatory tariff and non-tariff measures that President Claudia Sheinbaum would have announced this Sunday.
Inflation data in detail
INEGI reported that services were 4.64% more expensive in February than a year earlier, while prices for processed food, beverages and tobacco rose 3.78% annually.
Non-food goods were 1.75% pricier compared to February 2024, while energy prices, including those for electricity and gasoline, increased 3.57% annually.
The highest annual inflation rate for any individual category was that for meat. Consumers paid 10.53% more for beef, pork, chicken and other meat in February compared to the same month a year earlier.
In contrast, fruit and vegetable prices were 5.54% cheaper on a year-over-year basis.
An increase in prices for agricultural products (meat, fruit, vegetables) in recent years — in large part due to adverse climatic conditions including drought — has been a major contributor to high inflation in Mexico. Inflation reached 8.7% in August 2022, its highest level in more than two decades.
Other need-to-know economic data for Mexico
- The Mexican peso was trading at 20.30 to the US dollar shortly after 10:30 a.m. Friday, a significant improvement compared to the 21 to the greenback level it reached after U.S. tariffs took effect on Tuesday.
- Mexico’s economy grew 1.8% in annual terms in January, according to preliminary data from INEGI. Growth slowed in 2024, falling to 1.5% from 3.2% in 2023.
- Mexico’s unemployment rate was 2.7% in January, up from 2.6% at the end of 2024.
With reports from El Economista
