Surprise drop in inflation likely to trigger further interest rate cuts, experts predict

Mexico’s header ostentation slowed for the 3rd consecutive fortnight, according to the nationalist statistic bureau INEGI, falling backmost wrong the cardinal bank’s people range.

Inflation declined successful the archetypal fractional of July, marked by little costs for assorted cultivation products, specified arsenic lemons and avocados, giving emergence to expectations that the cardinal slope (Banxico) volition proceed to chopped involvement rates.

Headline ostentation declined much than expected successful aboriginal July, bringing it backmost wrong the cardinal bank’s people range. (Shutterstock)

Annualized ostentation amazed to the downside successful the archetypal fractional of July, slowing from 4.13% to 3.55%, beneath the marketplace statement of 3.61%. Consumer prices roseate 0.15% compared to the erstwhile 2 weeks, besides beneath expectations of a 0.27% increase.

President Claudia Sheinbaum celebrated the news, saying during her Thursday greeting property league that the slowdown successful ostentation “indicates that [Banxico] has country to support cutting involvement rates.”

Citing INEGI data, Sheinbaum said the emergence successful ostentation successful erstwhile months was chiefly owed to the summation successful the prices of beef, pork, and chicken, whose costs person begun to normalize.

Among the products with the highest terms increases during the archetypal 2 weeks of July were nopales, up 14.44%; aerial transport, up 11.25% and lettuce and cabbage, up 8.71%.

In the different column, grapes showed an 11.96% alteration successful price; papayas fell 5.86% and lemons fell 5.73%.

Banxico, which targets an ostentation complaint of 3% positive oregon minus 1 percent point, lowered its benchmark involvement complaint by 50 ground points successful June — its 4th consecutive chopped of that magnitude. This reduced the argumentation complaint successful Latin America’s second-largest system to 8.0%, the lowest since August 2022.

Brokerage Monex said the information amazed the marketplace arsenic ostentation reached its lowest level during the archetypal fortnight of July successful a decade. Still, halfway ostentation continues to contiguous challenges.

The intimately watched halfway terms index, which measures ostentation excluding volatile items similar nutrient and vigor prices, climbed 0.15% successful aboriginal July, compared with 0.22% a period earlier.

Rumbo Económico MÉX: En la 1ra. quincena de julio, la inflación wide fue de 0.15% q/q, situándose por debajo de la expectativa del mercado de 0.25%. A tasa anual, la inflación wide se moderó a 3.55% desde 4.13% previo, alcanzando así su nivel más bajo desde la 2Q de enero. pic.twitter.com/VGTJiv2pE7

— Monex Análisis (@MonexAnalisis) July 24, 2025

The year-to-year halfway constituent came successful astatine 4.25%, easing from 4.28% and beneath expectations (4.31%). Within the halfway index, goods “registered upward pressure,” according to a Scotiabank report, “rising from 3.97% to 4.01%, portion services decelerated from 4.63% to 4.49%.”

At the aforesaid time, the non-core complaint declined from 3.43% to 1.24%, fueled by a crisp diminution successful effect and rootlike prices (down 12.24%). This abrupt driblet offset a 10.70% summation successful livestock products.

In its connection from the June 27 meeting, Banxico said it expects to dilatory the gait of involvement complaint cuts. Monex analysts concurred, penning successful a study that “Given the stubbornness of halfway inflation, we expect Banxico to trim the standard of its cuts.”

Monex and Scotiabank task that the cardinal slope volition ballot for a 25 ground constituent complaint chopped astatine its Aug. 7 meeting, lowering the benchmark involvement complaint to 7.75%.

With reports from El Economista and Reuters