Mexico Economics Labour market becomes more relevant for inflation

Research evidence excerpt

Mexico Economics Labour market becomes more relevant for inflation

8 June 2026

Mexico Economics EconomicsMexico

Labour market becomes more relevant for inflation

◆ Mexico’s unemployment rate remains anchored close to all-time Jose Carlos Sanchez

lows, suggesting robust labour market dynamics, however, … ChiefHSBCEconomist,Mexico, S.A.,MexicoInstitucion de Banca Multiple, Grupo

Financiero HSBC

◆ … large informality, its drag on productivity, slow formal job jose.c.sanchez@hsbc.com.mx

+52 55 5721 5623

creation, double-digit increases to the minimum wage, and …

Prachi Mathur

Associate

◆ … reduced working hours from 2027, will likely create additional Bangalore

upside pressures for costs and inflation

Labour market dynamics could gain relevance

Mexico’s unemployment rate remains steady below 3%, suggesting robust dynamics.

However, we have noticed increased concerns from small- to large-size companies

with respect to mounting cost pressures related to complementary indicators and

underlying trends. In particular, the fact that informality dominates the labour market

continues to create headwinds for overall productivity. This, combined with a slow

creation of formal jobs, continued double-digit increases to the minimum wage (i.e.

started in 2018), and a gradual reduction of working hours starting in 2027 could

pose more upside risks for inflation, thus potentially weighing on monetary policy.

Mounting cost pressures from many fronts

While previous double-digit increases to the minimum wage did not translate into a

clear driver of inflation in recent years, conditions could change ahead, as pressures

accumulate. This has to do with the level reached already, mixed with soft economic

growth and stagnant productivity, mostly led by the dominating role of informality. In