According to figures released on Monday by the national statistics agency, Mexico’s inflation rate rose in January, supporting the central bank’s decision last week to keep its benchmark interest rate unchanged.
Consumer prices increased from 3.69% in December to 3.79% in January.
The reading marked a further rise in the annual inflation rate at the start of the year, although it fell short of the 3.82% forecast by analysts surveyed by Reuters.
The data support the Bank of Mexico’s view that inflation will take longer to reach its stated target, indicating that price pressures remain.
Core inflation hits its highest level since March 2024
A larger-than-expected increase was recorded in the core index, which excludes the most volatile components of the basket.
Core inflation rose to 4.52% in January from 4.33% in December, the highest level since March 2024.
Core inflation strips out energy and fresh food prices and is regarded as a key measure of underlying price trends.
An increase in the index points to more broad-based inflation across the economy.
On a non-seasonally adjusted basis, consumer prices rose 0.38% month on month in January.
Core inflation increased at a faster pace, rising 0.60% over the month.
Price patterns are influenced by taxes, tariffs, and wages
Several price-affecting policy measures were introduced at the start of the year.
The government imposed tariffs on China and other mainly Asian countries with which Mexico does not have free trade agreements, raised the minimum wage, and implemented additional taxes.
Cigarettes and bottled soft drinks, which were subject to new tax increases that took effect at the beginning of the year, were among the most affected goods.
These products recorded the largest price increases during the month.
Members of the central bank’s governing board said prices are expected to rise as a result of the additional taxes and tariffs, though likely only temporarily.
Officials added that more time is needed to assess their full impact on inflation.
Central bank holds rates after long easing cycle
The Bank of Mexico held its benchmark interest rate at 7.0% last Friday, ending 12 consecutive rate cuts.
The decision reflected the bank’s view that inflation remains above its 3% target and that a return to that level may take longer than previously expected.
The central bank now expects inflation to reach the 3% target in the second quarter of 2027, a significant delay from its earlier forecast, which had projected the target would be met by the third quarter of this year.
Recent inflation data appear to support this more cautious stance, as both headline and core measures rose in January.
Central bank officials have said that new taxes, tariffs, and wage increases are key factors shaping the near-term inflation outlook.
Policymakers have emphasised the need to monitor price movements closely over the coming months, even though they expect the impact to be temporary.
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