Mexico’s annual inflation rate rose to 3.93% in April 2025, up from 3.8% in March, according to the National Institute of Statistics and Geography (INEGI). This increase aligns with market expectations and remains within the Bank of Mexico’s (Banxico) target range of 3% ±1%. The uptick in inflation is primarily attributed to core inflation components, which exclude volatile food and energy prices.
The central bank’s next monetary policy decision is scheduled for May 15, with analysts anticipating further interest rate cuts to support economic growth amid global trade uncertainties.
Inflation Details
- Annual Inflation Rate: 3.93% in April, up from 3.8% in March.
- Monthly Inflation Rate: 0.33% increase in April.
- Core Inflation: Rose by 0.49% month-over-month, reaching an annual rate of 3.93%, up from 3.64% in March.
- Non-Core Inflation: Decreased by 0.21%, influenced by a 1.59% drop in energy prices due to seasonal adjustments in electricity tariffs.
The rise in core inflation indicates sustained price pressures in goods and services, with services experiencing a 4.56% annual increase and goods at 3.38%.
Economic Implications
The inflation data supports expectations that Banxico may continue its monetary easing cycle. In March, the central bank reduced its benchmark interest rate by 50 basis points to 9%, marking the second consecutive cut. Analysts, including those from JPMorgan and Pantheon Macroeconomics, anticipate a similar rate cut in May, citing the central bank’s dovish tone and stable inflation levels.
Banxico Governor Victoria Rodríguez Ceja indicated that the current inflationary environment allows for continued rate reductions, provided inflation remains within the target range. Deputy Governor Jonathan Heath echoed this sentiment, emphasizing that declining economic activity and easing inflationary pressures justify a less restrictive monetary policy stance.
External Factors
Mexico’s economy faces challenges from global trade tensions, particularly due to tariffs imposed by the U.S. government. These trade uncertainties have contributed to a cautious economic outlook, with the International Monetary Fund projecting a 0.3% contraction in Mexico’s GDP for 2025. The central bank’s monetary policy decisions will need to balance supporting economic growth while maintaining inflation within the target range.
Outlook
With inflation aligning with expectations and remaining within the target range, Banxico is positioned to continue its monetary easing to stimulate economic growth. The central bank’s upcoming policy decision on May 15 will be closely watched by markets and policymakers. Continued monitoring of inflation trends and external economic factors will be crucial in shaping future monetary policy actions.
