2H/Jul CPI: Same Script, Different Vegetable

Research evidence excerpt

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M

Update

August 7, 2026 01:42 PM GMT

Mexico Economics | North America

Morgan Stanley & Co. LLC

Nicolas Eterovic

Economist

2H/Jul CPI: Same Script,

Different Vegetable

Morgan Stanley C.T.V.M. S.A.

Julia Lobato Barbosa

Economist

Fernando D Sedano

Key Takeaways

Chief LatAm Ex-Brazil Economist

The 2H July CPI printed at 0.11% (vs. 1H Jul), in line with consensus (0.10%) and

our forecast, while core inflation came in at 0.11%, above our 0.08% forecast.

The surprise came from non-core, as onion prices surged 16.4%, becoming the

single largest driver of the fortnight, even as tomato prices continued to decline.

Core dynamics remained benign, with no evidence of second-round effects, while

housing continued to anchor the persistent component of services inflation.

Annual headline rose to 3.14%, still above Banxico's 3.0% target, while core held

at 3.95%, keeping the pause-and-monitor stance intact.

The 2H/July headline CPI printed in line with expectations. Headline inflation

printed at 0.11% versus 1H/Jul, in line with consensus and our forecast (0.10%), while

core inflation — closely watched by the central bank — came in at 0.11%, above our

0.08% forecast, though a sharp deceleration from 1H July's 0.16% ( Exhibit 1 ). On an

annual basis, headline inflation rose to 3.14% from 3.10%, still above Banxico's 3.0%

target, while core held steady at 3.95%. On a monthly basis, full-July headline

inflation came in at 0.03% m-o-m, in line with consensus (0.02%) and 29bp below

the 2010-2019 average for July (0.32%), while core rose 0.23% m-o-m.

In the fortnight, core goods increased 0.11%, with food (0.08%) and non-food

(0.14%) both decelerating relative to 1H July, led by hair products and men's

pants, partially offset by a decline in automobile prices. We continue to see no

evidence of meaningful second-round effects, consistent with Banxico's assessment,

and weak domestic demand together with a supportive FX backdrop continue to

help anchor merchandise inflation. Core services rose 0.12%, a marked deceleration

from 1H July's 0.20%, led by lunch counters and small restaurants and home

…