Mexico Headline Inflation in Early January Beats Expectations, Slides Below 4%

• Mexico's annual inflation rate slowed to its lowest level in almost four years in the first half of January, official data showed on Thursday, a price level likely to encourage the central bank to keep cutting borrowing costs.
• 12-month headline inflation came in at 3.69% in early January, statistics agency INEGI announced. This was its lowest since February 2021 and was within the central bank's 3% target, plus or minus one percentage point. Annual inflation was below both the previous month's 4.44% and the 3.78% forecast by economists polled by Reuters.
• Slowing consumer price growth was driven by lower non-processed food costs, which helped offset a slightly higher-than-expected reading in the core index, which some consider more reliable as it excludes volatile energy and food prices.
• In December, the Mexican central bank - known as Banxico - delivered its fifth interest-rate cut that year, taking its key lending rate to 10.00% with a 25-basis-point reduction while citing progress on inflation.
• Mexico is bracing for additional price pressures as U.S. President Donald Trump threatens tariffs on its exports in addition to mass deportations.
• Core inflation rose 0.28% in early January, while the annualized core rate came in at 3.72%, exceeding market expectations of 3.68% and the previous month's 3.62%.
• Banxico is scheduled to announce its next rate decision on Feb. 6.

(Source: Reuters)