Mexico Economics Weekly: Unchanged Monetary Stance

Research evidence excerpt

Mexico Economics Weekly: Unchanged Monetary Stance

Figure 1. Inflation forecasts from Banxico were adjusted marginally.

2025 2026 2027 2028

CPI Inflation (%, YoY)

III IV I II III IV I II III IV I II

Headline

Jun-26 3.6 3.7 4.1 4.0 3.8 3.5 3.2 3.0 3.0 3.0 3.0 3.0

May-26 3.6 3.7 4.1 4.1 3.8 3.5 3.2 3.0 3.0 3.0 3.0 3.0

Core

Jun-26 4.2 4.3 4.5 4.2 3.8 3.5 3.1 3.0 3.0 3.0 3.0 3.0

May-26 4.2 4.3 4.5 4.1 3.7 3.4 3.1 3.0 3.0 3.0 3.0

© 2026 Citigroup Inc. No redistribution without Citigroup’s written permission.

Source: Banxico, Citi Research

The balance of risks for inflation remains tilted to the upside. The list is broadly

unchanged relative to the previous statement, although climate-related risks have

moved ahead of cost pressures and currency depreciation in ordering. While not

explicitly discussed in the statement, this shift is likely consistent with increased

concern around weather-related shocks linked to El Niño conditions. While the

upside risks include disruptions from trade policies or geopolitical conflicts;

persistence of core inflation; climate-related shocks, newly elevated in

prominence; cost pressures; and currency depreciation, downside risks comprise

weaker-than-expected economic activity in Mexico and/or the United States; a

lower-than-anticipated pass-through of cost increases to prices; and currency

appreciation.

El Niño poses a meaningful upside risk to non-core food inflation in the second

half of the year. While non-core food prices appear to be easing in the near term,

the probability of the El Niño weather phenomenon emerging remains elevated,

which warrants close monitoring in the months ahead. Our own estimate of the

effect of El Niño on Mexico’s headline inflation is a 12-month accumulated effect