Mexico recorded a small acceleration in consumer price inflation in January, a development that the central bank cited in maintaining its pause in the easing cycle. Official data from the national statistics institute put year-on-year headline inflation at 3.79% for January, a figure that was marginally lower than the 3.82% median estimate from Bloomberg-surveyed analysts but described as an increase from December’s 3.79% reading.
Stripping out the more volatile components, core inflation rose more notably. The year-on-year rate for core inflation reached 4.52% in January, up from December’s 4.33% and slightly above the 4.51% median estimate. That core measure now sits just above the upper bound of the central bank’s stated tolerance range.
The Bank of Mexico - commonly known as Banxico - targets inflation of 3% with an allowable deviation of plus or minus one percentage point. With core inflation exceeding the upper limit of that range, the readings provided context for the institution’s recent monetary policy decision.
On Thursday, Banxico’s monetary policy committee voted unanimously to keep its policy rate at 7%, continuing the pause in rate cuts that began roughly two years ago. At the same time, the central bank revised the timing for when it expects inflation to converge on its 3% target. That projection has been moved from the third quarter of 2026 to the second quarter of 2027.
The data and the central bank’s response underscore the persistence of underlying price pressures, particularly as reflected in core inflation. Banxico’s decision to hold the policy rate and to delay the projected convergence of inflation to target signals a more cautious approach to easing than previously anticipated by authorities.
Market participants and economic actors who watch interest-rate trajectories - including fixed income investors and banks - will likely view the central bank’s updated timetable and the recent readings as important inputs for near-term expectations. Consumers and businesses sensitive to core price trends may also consider the persistence in core inflation when planning spending and pricing decisions.
Note: The figures and policy decisions reported here are based on published data and Banxico statements.