Mexico’s inflation rate experienced a slowdown in the first half of September, reaching its lowest level since February 2021, according to the National Statistics Institute.
The consumer price index increased by 0.25% in the first two weeks of the month, with a year-on-year rise of 4.44%. In comparison, the 12-month inflation rate stood at 4.64% by the end of August.
Meanwhile, core CPI, which excludes volatile prices of agricultural products and energy, saw a 0.27% increase in the first half of September, resulting in an annual rate decline from 6.08% in August to 5.78%.
While inflation has been gradually decreasing since February, the Bank of Mexico has shown no intention of implementing interest rate cuts. The central bank has maintained its overnight interest-rate target at 11.25% over its past three meetings, emphasizing its intention to keep rates stable for a considerable period.
“We anticipate that the significant decrease in Mexico’s inflation has already occurred, and we expect the headline rate to remain relatively stable over the next 9-12 months,” commented Jason Tuvey, deputy chief emerging markets economist at Capital Economics.
The Bank of Mexico has set a 3% inflation target and has been predicted by the majority of banks surveyed by Citibanamex, a unit of Citigroup, to initiate interest rate reductions in early 2024.