Inflation in Mexico is at its lowest level in over two years

According to a recent Reuters poll, Mexico is likely to experience its lowest headline inflation rate in more than two years during the first half of June. However, it is anticipated to remain above the central bank's target, indicating that the bank may maintain its key interest rate for an extended period.

Eleven analysts participating in the survey provided a median forecast of 5.30% for the annual headline inflation rate, marking the lowest level since the second half of March 2021. Despite this decrease, it would still exceed the official target of 3%, which allows for a deviation of one percentage point in either direction.

In the Bank of Mexico's latest monetary policy announcement, the benchmark interest rate was kept unchanged at 11.25%. This decision concluded a nearly two-year cycle of rate hikes and signaled the bank's intention to maintain the rate at its current level for an extended period. The objective is to allow inflation to gradually converge to the targeted rate.

The core index, which excludes volatile food and energy prices, is expected to decline to 7.02% on a year-on-year basis, representing its lowest level since March 2022.

For the first half of June, consumer prices are projected to have risen by 0.15% compared to the preceding two-week period. Meanwhile, the core measure is expected to have increased by 0.22%.

Mexico's statistics institute will release the inflation data for the first half of June on Thursday, providing a comprehensive overview of the country's current inflationary trends.