Overview

• Headline inflation fell to 3.55% in early July, marking its lowest level in seven months and slipping below Banxico’s 4% upper tolerance threshold.
• Core inflation edged down to 4.25%, staying above the central bank’s target and signaling persistent price pressures.
• Non-food merchandise and some agricultural goods saw price declines, but services inflation remained above 4.4% and livestock product prices rose 10.7%.
• Analysts at Monex, Banco Base and Grupo Financiero Bx+ now project a 25 basis-point policy rate cut to 7.75% at Banxico’s August meeting.
• Potential peso depreciation poses a latent risk of renewed imported inflation, limiting the scope for more aggressive monetary easing.