Mexico Inflation Slows To Six-Year Low as Banxico Holds Rates

• Annual inflation in Latin America's second-largest economy hit 3.12% last month, INEGI said, ​down from 3.37% in June and the lowest since May ​2020. The reading matched expectations from economists in a Reuters poll ⁠and remained within the Bank of Mexico's (Banxico) target range of ​3%, plus or minus one percentage point.
• The data came after Banxico on ​Thursday kept its benchmark interest rate at 6.5%, extending a pause that began in June, saying that both headline and core inflation were still expected to decline ​over its forecast horizon but at a slower pace than previously ​anticipated.
• Headline inflation is expected to converge to 3% in the fourth quarter of ‌2027, ⁠according to the bank. "The key story here is that disinflation remains on track, but the final stage is likely to prove gradual," Pantheon Macroeconomics' chief Latin America economist Andres Abadia said in a note to ​clients.
• "Nothing in today's ​report changes our ⁠policy outlook. Inflation continues to evolve broadly in line with Banxico's expectations, supporting the board's decision to ​remain on hold," he added.
• According to the National Institute of Statistics and Geography (INEGI), consumer prices ​in July rose 0.03% from the previous month, matching economists' forecasts. Core inflation, which strips out some volatile food and energy prices, hit 3.95% in the ⁠12 months through July. On a monthly basis, ​core prices rose 0.23%. Economists in the Reuters poll had expected readings of 3.94% and ​0.22%, respectively.

(Source: Reuters)