MNI BRIEF: Mexico's December Inflation 3.69%, Below Consensus

Mexico's INPC annual inflation was 3.69% in December, the Mexican National Institute of Statistics and Geography said Thursday, below the 3.75% consensus forecast, down from 3.80% in November and ending 2025 within the 1-percentage point variance range of Banxico's 3% target.

Core inflation was 4.33%, down from 4.43% the previous month. "At the monthly rate, the non-core price index decreased by 0.16 percent. Within this category, agricultural product prices fell by 0.66%, while energy prices and government-authorized tariffs rose by 0.24%," INEGI said.

Recent progress in bringing inflation closer to the 3% target was the main reason behind the Central Bank of Mexico’s decision to cut rates aggressively in 2025.

Banxico reduced the policy rate by 25bp at its last meeting to 7.00%, but core inflation's resilience led to a split decision, with Deputy Governor Jonathan Heath voting to keep borrowing costs unchanged and raising doubts about whether Banxico would have room to cut this year. (See MNI BANXICO WATCH: Guidance Shift Suggests Banxico Pause)