Mexico’s annual headline inflation rate fell for a second consecutive month in May, declining to 3.94% from 4.45% in April, according to the national statistics agency INEGI.
The headline rate was thus within the Bank of Mexico’s 2-4% target range for the first time since January, when annual inflation was 3.79%.
The 3.94% reading for March was below the 4.03% median estimate of 15 analysts polled by Reuters.
INEGI also reported on Tuesday that consumer prices declined 0.21% in May from April, the first month-over-month drop in two years. Mexico’s annual core inflation rate, which excludes some volatile food and energy prices, was 4.19% in May, down from 4.26% in April.
The publication of the inflation data for May comes after the Bank of Mexico cut its benchmark interest rate by 25 basis points to 6.50% at the start of last month. The central bank said at the time that its governing board estimated that it would be “appropriate to maintain the reference rate at its current level” for the foreseeable future.
Andrés Abadia, chief Latin America economist at Pantheon Macroeconomics, said in a note on Tuesday that inflation in Mexico is “moving in the right direction, but progress remains uneven and core services inflation is still running above levels consistent with the [3%] target.”
Fruit and vegetable prices surge 14% annually
INEGI’s data shows that prices for fruit and vegetables — which can fluctuate significantly due to climatic factors — were 14.38% higher in May than a year earlier. Year-over-year inflation for the broader agricultural products category was 2.90%, tempered by a 4.74% decline in the cost of meat.
Gabriela Siller, director of economic analysis, highlighted on X that annual inflation for tomatoes was 99.23% in May.
Annual inflation for the processed food, beverages and tobacco category was 5.13% in May, while prices for non-food goods increased 2.63%.
Year-over-year inflation for the services category was 4.57% last month. Within that category, housing costs increased 3.61% while school fees rose 5.95%.
Siller wrote on X that “the main risk” for inflation in Mexico continues to be services.
“In May, services inflation accelerated for a third consecutive month to stand at 4.57% annually,” she wrote, noting that the inflation rate for services has now been above 4% during 54 consecutive months.
Annual inflation for energy, including gasoline and electricity, was 3.27% in May, according to INEGI.
Other need-to-know economic data
- The USD:MXN exchange rate was 17.43 just after noon Mexico City time, according to Bloomberg.
- The Mexican economy contracted 0.6% in the first quarter of 2026 compared to the final three months of 2025. Annual growth was 0.4% in Q1.
- Mexico’s export revenue increased 32.6% annually in April and 21.8% in the first four months of 2026. Total export revenue in the January-April period was US $247.62 billion.
- Mexico’s unemployment rate was 2.5% in April.
- 55.2% of all Mexican workers were employed in the country’s informal sector in April. That percentage rose 0.5 points from a year earlier.
With reports from El Economista and Reuters
