Mexico’s annual headline inflation rate increased for a second consecutive month in March, but remains within the Bank of Mexico’s target range.

The national statistics agency INEGI reported Wednesday that the annual headline rate was 3.80% in March, up slightly from a 3.77% reading in February. Month-over-month inflation was 0.31%.

The annual headline rate was in line with the consensus forecast of analysts polled by Reuters.

The Bank of Mexico (Banxico) targets 3% inflation with tolerance of 1 percentage point in either direction. Despite the uptick in inflation, the central bank is still expected to make another cut to its key interest rate after its board’s monetary policy meeting on May 15.

In late March, Banxico cut its benchmark interest rate by 50 basis points to 9%, the lowest level since 2022.

While annual headline inflation ticked up in March, the annual core inflation rate, which excludes volatile food and energy prices, declined to 3.64%, just below the 3.65% reading in February. The core rate was also in line with market expectations.

Fresh food prices up nearly 5%

INEGI data showed that prices for agricultural products — fruit, vegetables and meat — were 4.87% higher in March than the same month last year.

Meat prices rose 9% in annual terms, while the cost of fruit and vegetables actually fell 2.28% compared to March 2024.

Processed food, beverages and tobacco were 4.15% more expensive in March than a year earlier, while the price of non-food goods rose 1.88% annually.

Mexicans paid 4.35% more for services in March compared to a year earlier, while the cost of energy, including gasoline and electricity, increased 2.94% annually.

With reports from El Economista and Reuters