Mexico CPI Inflation Rate: Data, Forecast & Trends

As of April 2025, the latest official data from Mexico's National Institute of Statistics and Geography (INEGI) shows the headline Consumer Price Index (CPI) at 4.63% on a year-on-year basis. This figure represents a slight but notable acceleration from the 4.42% recorded in March 2025 and 4.40% in February 2025. This uptick has interrupted a previously more consistent disinflationary trend and places inflation further above the Bank of Mexico's (Banxico) target of 3.0% +/- 1 percentage point. This recent behavior underscores the persistent nature of current inflationary pressures.

A deeper dive into the components of the April 2025 year-on-year inflation rate reveals a divergence in price dynamics:

• Core Inflation: The core CPI, which excludes volatile items like food and energy and is closely watched by Banxico as an indicator of underlying trends, stood at 4.31% year-on-year. Encouragingly, this was a decrease from 4.55% in March, continuing a gradual downward path and marking its lowest level since mid-2021.
• Core Goods: Inflation for core goods registered 3.67% year-on-year, reflecting moderating pressures likely due to the easing of global supply chain disruptions and the lagged effects of previous monetary tightening.
• Core Services: In stark contrast, core services inflation remained stubbornly high at 5.09% year-on-year. This persistence is a key concern, driven by factors including strong wage growth (partly from significant minimum wage hikes), a relatively tight labor market in certain sectors, and resilient consumer demand.
• Non-Core Inflation: The non-core component, which includes more volatile items, surged to 5.54% year-on-year, a significant jump from 3.99% in March. This was the primary driver of the headline inflation uptick.
• Agricultural Products: This sub-component experienced a sharp increase, rising by 7.28% year-on-year. Specific items like fruits and vegetables saw even more dramatic price hikes (e.g., an 18.65% YoY increase for this combined category according to some breakdowns), highlighting the impact of supply-side shocks, possibly weather-related.
• Energy and Government-Authorized Tariffs: Prices in this category rose by 4.05% year-on-year. Fluctuations here are often influenced by global energy prices and adjustments to government-set tariffs.

This component breakdown reveals a dual inflationary narrative: while core inflation shows a welcome, albeit slow, deceleration, a sharp spike in volatile non-core items, particularly agricultural products, has pushed headline inflation upwards. The stickiness in services inflation remains a central challenge.

Looking at the shorter-term dynamics, the national CPI increased by 0.20% in April 2025 compared to March 2025. The month-on-month changes in the main components were:

• Core Inflation MoM: Increased by 0.18%.
• Core Goods MoM: Rose by 0.27%.
• Core Services MoM: Showed a more subdued increase of 0.07%.
• Non-Core Inflation MoM: Increased by 0.26%.
• Agricultural Products MoM: Rose by 0.62%, indicating continued upward pressure in this category during the month.
• Energy and Government-Authorized Tariffs MoM: Decreased slightly by -0.07%, partly reflecting the seasonal introduction of electricity subsidies in some regions.

Specific items that exerted significant upward pressure on a month-on-month basis in April 2025 included chile serrano (+64.4%), other fresh chiles (+33.6%), tomatoes (+13.6%), green tomatoes (+12.9%), and oranges (+9.0%). Conversely, items like onions (-22.0%), domestic natural gas (-14.0%), and electricity (-1.8%) saw price decreases, with the latter often linked to summer subsidy programs commencing in various cities.

Mexico's average annual inflation rate for the calendar year 2024 stood at 4.72%. This figure represents a notable decrease from the 5.53% recorded in 2023, signaling a continued moderation of price pressures in the Mexican economy. Despite this deceleration, the 2024 average remains above the Bank of Mexico's target range of 2% to 4%, indicating that inflationary concerns, while easing, have not fully subsided.

Throughout 2024, various factors influenced this rate, including global commodity prices and domestic economic conditions. The Bank of Mexico's monetary policy tightening efforts from previous years played a significant role in bringing inflation down from its peak. While the annual average reflects a cooling trend, the central bank continues to monitor price dynamics closely to ensure inflation converges towards its target sustainably.

Mexico's inflation experience over the past thirty years has been transformative, moving from periods of acute crisis to relative stability, though recent years have presented new challenges:

• The Tequila Crisis (Mid-1990s): The peso devaluation in December 1994 triggered a severe economic crisis, with annual inflation skyrocketing to over 50% in 1995. This period was a stark reminder of the country's macroeconomic vulnerabilities.
• Path to Stability (Late 1990s - Early 2000s): Following the crisis, Mexico embarked on structural reforms. The Bank of Mexico gradually gained autonomy and credibility, formally adopting an inflation-targeting regime in 2001 with a target of 3% +/- 1 percentage point. This era saw a successful disinflation process, bringing inflation down from high double digits to more manageable single-digit levels.
• Era of Moderate Inflation (2000s - 2010s): For much of these two decades, inflation remained relatively stable and often within or close to Banxico's target band. The average inflation rate hovered around 4%. However, there were episodes of volatility, such as a temporary spike during the 2008-2009 global financial crisis and pressures from domestic administered price adjustments like periodic fuel price hikes ("gasolinazos").
• Renewed Pressures (Late 2010s): In 2017, inflation again breached the 6% mark, driven by the liberalization of gasoline prices and significant peso depreciation against the US dollar.
• The Pandemic and its Aftermath (2020 - Present): The COVID-19 pandemic initially caused a dip in inflation due to the sharp contraction in demand. However, from 2021 onwards, a confluence of factors—global supply chain disruptions, surging international commodity prices (particularly food and energy), and a robust recovery in domestic demand—led to a significant inflationary wave. Inflation peaked at a two-decade high of 8.7% year-on-year in August and September 2022. In response, Banxico undertook one of its most aggressive monetary tightening cycles, raising its policy interest rate substantially from 4.0% in mid-2021 to 11.25% by early 2023, holding it there for a year before a cautious cut in early 2024, and then pausing.

Several domestic and international factors pose significant risks to Mexico's inflation outlook:

• Persistence of Services Inflation: This remains the primary domestic concern. Strong wage growth (including substantial annual minimum wage increases), a resilient labor market in certain sectors, and robust consumer demand for services continue to exert upward pressure on service prices. Breaking this wage-price persistence in the services sector is crucial for Banxico.
• Agricultural Price Volatility: As evidenced by the April 2025 data, agricultural prices are highly susceptible to shocks, including adverse weather conditions (Mexico has been facing widespread drought concerns), pest outbreaks, and other supply chain disruptions. These can lead to sharp, unexpected increases in non-core and headline inflation.
• Exchange Rate Fluctuations: While the Mexican peso exhibited remarkable strength for an extended period (the "super peso"), it is not immune to shifts in global investor sentiment, changes in US-Mexico interest rate differentials, or domestic political and policy uncertainties (e.g., election cycles). A significant depreciation of the peso would quickly translate into higher import costs and inflationary pressures.
• Global Energy Price Dynamics: Although government subsidies can partially insulate domestic consumers, Mexico's non-core inflation remains exposed to global oil and gas price movements. Renewed geopolitical tensions or supply constraints could push energy prices higher.
• Fiscal Policy Stance: With potential pressures for increased social spending or public investment, particularly around political cycles, an overly expansionary fiscal policy could fuel aggregate demand and complicate disinflation efforts. The impact of ongoing and future minimum wage policies will also be closely watched.
• Nearshoring Opportunities and Challenges: The trend of "nearshoring"—companies relocating their manufacturing and supply chains to Mexico to be closer to the US market—presents a significant long-term economic opportunity. However, in the shorter term, rapid inflows of investment could lead to localized demand pressures, wage increases in specific industries, and infrastructure bottlenecks, potentially creating pockets of inflation if supply-side capacity does not expand commensurately.
• US Monetary Policy and Global Financial Conditions: The policy decisions of the US Federal Reserve are a key external determinant for Banxico. If the Fed maintains a "higher for longer" interest rate stance, it constrains Banxico's room to maneuver its own policy rate without risking capital outflows and peso weakness.
• Climate Change and Extreme Weather Events: Mexico is highly vulnerable to the impacts of climate change, including more frequent and severe droughts, hurricanes, and floods. These events can devastate agricultural production, damage infrastructure, and disrupt economic activity, leading to significant supply-side inflationary shocks.

Mexico Inflation Data