Mexico’s headline inflation accelerated again in May, though less than anticipated, complicating the path for Banxico to cut the key interest rate in its next monetary policy decision.
In May 2024, inflation in Mexico rose for the third consecutive month, reaching an annual rate of 4.69%, up from 4.65% in April. This increase was driven by higher prices for services and agricultural products.
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Despite the third consecutive acceleration, May’s inflation data was below analysts’ expectations, who had predicted the National Consumer Price Index (INPC) would rise to an annual rate of 4.82%.
On a monthly basis, the general INPC increased by 0.17% during May, according to the report from the National Institute of Statistics and Geography (Inegi). The fact that annual inflation reached 4.69% is positive because it was expected to rise more. Thus, the market’s interpretation of this data is likely to be favorable.
Core inflation (which excludes goods and services with more volatile prices) increased to an annual rate of 4.21%, with the Education (6.34%) and Other Services (6.14%) components showing the largest price increases. On a monthly basis, core inflation also rose by 0.17%.
Meanwhile, non-core inflation in the fifth month of the year was 6.19% annually, though it fell by 1.28% compared to the previous month.
One factor that helped contain non-core inflation was the prices of energy and government-authorized tariffs, which decreased by 3.0% on a monthly basis due to adjustments in electricity rates in 11 cities across the country with the onset of the warm season.
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