Overview
- Late July comments from Banxico subgovernor Gabriel Cuadra warned that nearly two years of elevated services inflation around 5.2–5.3% is the main risk to reaching the 3% goal.
- Overall inflation has cooled recently, falling from 3.37% at the end of June to about 3.10% in mid‑July, while core inflation sits slightly below 4.0%.
- Banxico’s leadership says the current policy rate is appropriate for now but stressed it remains ready to tighten policy if services inflation or external shocks push underlying inflation higher.
- Officials attribute much of this year’s volatility to transitory supply shocks—special taxes, new tariffs, adverse weather and higher global energy costs—but they caution these shocks can still slow disinflation.
- Rising service prices for restaurants, hotels and transport are raising household costs and narrow Banxico’s room to cut rates, and the bank may revise its forecasts if services inflation proves persistent.