Inflation in Mexico dropped to 3.59% in January 2025, lower than expected, prompting Banxico to cut interest rates to 9.50%. President Sheinbaum praised the figures, which reflect a positive trend within Banxico’s targeted range. Core inflation slightly increased as risks from trade uncertainties linger, with analysts anticipating inflation to decrease further through 2026.
In January 2025, inflation in Mexico decreased significantly, as reported by INEGI, reaching 3.59%, down from 4.21% in December. This rate was slightly below economists’ expectations, with forecasts around 3.61% to 3.63%. Concurrently, Mexico’s central bank, Banxico, cut its benchmark interest rate by 50 basis points to 9.50%, indicating potential for further monetary easing due to economic contraction.
During a press conference, President Claudia Sheinbaum highlighted the positive inflation data and the central bank’s decision. INEGI indicated that January’s consumer price index rose by 0.29%, a decrease from December’s 0.38%. This month’s data aligns with Banxico’s target inflation range of 3%, showing a progress compared to January 2024’s inflation of 0.89%.
Fruits and vegetables heavily contributed to the lowered inflation, showing a drop of 4.69%, while other food categories increased by 0.76%. Energy prices went up by 0.93%. Core inflation, which excludes volatile food and energy prices, increased slightly to 0.41% for January and 3.66% on an annual basis, below the 3.69% forecasted by analysts.
Andrés Abadía, chief Latin America economist at Pantheon Macroeconomics, referred to the report as “a good inflation report, supporting Banxico’s dovish tilt yesterday.” However, he cautioned about ongoing risks from trade uncertainties potentially impacting investment and activity, stating, “It’s a double-edged sword.” A recent Citi survey expects year-end inflation at around 3.9%, with a decrease to 3.7% by the end of 2026.
The recent inflation data in Mexico indicates a marked decrease from previous months, showcasing the effectiveness of monetary policies adopted by Banxico in response to economic pressures. Inflation measurement is critical, as it affects monetary policy choices, particularly interest rate adjustments. Core inflation trends are vital for understanding underlying price movements as they exclude items with high volatility, such as food and energy, which offers insight into broader economic conditions. The global context, including trade dynamics, influences these rates significantly. Analysts remain cautious regarding investment climates affected by uncertainties, suggesting that while current trends are favorable, external factors could impede progress. Understanding the implications of these economic indicators helps stakeholders make informed decisions.
January 2025 saw a notable decline in Mexico’s inflation, supporting the central bank’s recent interest rate cuts to stimulate the economy. Although current inflation rates fall within targeted ranges, ongoing economic uncertainties may pose future challenges. Experts forecast continued monitorization of inflation trends and suggest that investors should remain vigilant regarding potential economic fluctuations influenced by trade conditions.
Original Source: mexiconewsdaily.com
