Drop in food prices pushes México’s inflation down to 4.66%

Annual headline inflation is at its lowest point since May, according to data recently published by INEGI, México’s national statistics institute.

In the first half of September, the statistics agency reported an annual headline rate of 4.66%, down from 4.99% for the month of August and the lowest rate in the last seven fortnightly periods. In its most recent survey of experts, Citibanamex had forecast a rate of 4.71%.

Price drops in agriculture and livestock products drove the low inflation — good news for the grocery budgets of Mexican households. Fruits and vegetable prices decreased even more, down 1.54% after a spike in prices in August. Overall, however, fruit and vegetable prices are up 7.15% over what they were in the same period of September 2023.

The drop in food prices was tempered by a smaller increase in gasoline prices, after the federal government reduced subsidies.

Core inflation — which excludes volatile food and energy prices — rose 0.21% compared to the last 15 days of August and was up 3.95% year-over-year compared to 2023. 

The price of services increased more than that of goods over the previous 15-day period  —  0.24% versus 0.18% respectively — leaving year-over-year inflation at 2.94% for services and 5.15% for goods.

According to the newspaper La Jornada, analysts agreed that given current inflationary trends, the Bank of México is likely to continue reducing interest rates at its next monetary policy meeting on Thursday. The interest rate currently stands at 10.75%, after a surprise rate cut in early August. It could face a further cut of 0.25 to 0.5 basis points.

With reports from La Jornada