Mexico Economics Weekly: Inflation outlook relief

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Mexico Economics Weekly: Inflation outlook relief

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10 Jul 2026 07:00:00 ET │ 22 pages

Mexico Economics Weekly

Inflation outlook relief

CITI'S TAKE

Julio Cesar Ruiz AC

We have reduced our headline and core end-of-year inflation forecasts. Our +52-55-8421-6833

headline estimate is now 4.1% YoY, compared to our previous scenario of julio.ruiz@citi.com

4.4%, while we now see core inflation at 4%, versus our previous scenario

also of 4.4%. The downward revision is explained mainly by the better- Felipe Juncal AC

than-expected evolution of core inflation supported by core goods inflation felipe.juncal@citi.com

amid a resilient currency, while services inflation has continued with its slow

easing trend despite the slack in the economy. Our new forecasts also

reflect, in part, the downward pressure from volatile non-core food

inflation, though we expect this to rebound by the end of the year with

upside risk due to El Niño.

Inflation — A good inflation number was released this week. Headline biweekly

inflation for the second half of June (2H June) stood at –0.2% (3.18% YoY). The

headline figure was dragged by downside pressure from fruit and vegetable prices in

the non-core index. Core inflation stood at 0.02% (3.94% YoY). Within core inflation,

the downside surprise to us came from both the core goods and core services

indexes. For more, see Mexico Economics – Mexico CPI note & detailed chart pack

for the second half of June: downside inflation surprise.

Monetary policy — The minutes from Banxico’s June meeting support our view of no

rates changes for the remainder of the year. A consensus emerged among all five

members to maintain the policy rate at its new level going forward. For more, see

Mexico Economics – Banxico minutes: Stable rates.