Inflation in Mexico decelerated to 4.40% in February.

Consumer inflation in Mexico reported a pronounced deceleration in February, according to information released by the National Institute of Statistics and Geography (Inegi).

The data showed that the National Consumer Price Index (INPC) exhibited a variation of 0.09% compared to January, while on an annual basis, it stood at 4.40 percent.

The annual inflation figure for February represented a significant deceleration from the 4.88% annual rate reported earlier in the year.

Thus, inflation would continue to converge towards the Banco de México’s (Banxico) target of 3% +/- 1 percentage point; however, this is expected to occur at a slower pace.

Within the Inegi report, it was observed that pressures persist in core inflation, which excludes from its calculation the most volatile goods and services.

In February, core inflation stood at 4.64% from January’s rate of 4.76%. Thus, it reported 13 months of deceleration.

In this category, the prices of goods increased by 4.11% while services rose by 5.30%.

Headline inflation, on the other hand, exhibited a rate of 3.67% in the second month of the year. This was a pronounced deceleration after prices surged by 5.24% in January.

In this category, agricultural prices increased by 4.77% annually, while energy and government tariff prices rose by 2.75%.

In short, the annual inflation decelerated to 4.40%, marking the lowest rate since November 2023 and increasing the likelihood of Banco de México (Banxico) making a 25 basis point interest rate cut on March 21st.