Mexico’s Inflation Rises to 3.75% in October, Above Forecasts
Mexico's annual inflation hit 3.75% in October, above forecasts, days after Banxico cut rates. Airfare, electricity and tomatillo prices rose most.
Mexico’s annual inflation rate rose to 3.75 percent in October, faster than economists expected, according to the national statistics institute (INEGI), which reported the figure on Monday. The reading comes days after the central bank, Banxico, cut its benchmark interest rate, and it is likely to bring more scrutiny of that decision, El Financiero reported.
Prices for airfare, electricity and several vegetables rose sharply, which matters for household budgets in Mexico City.
The central numbers
- 3.75 percent: annual consumer price inflation in October. A Bloomberg survey of 23 economists had a median forecast of 3.65 percent, and September’s rate was 3.45 percent.
- 3.80 percent: core inflation, which excludes volatile food and energy prices and is the measure the central bank follows closely. Economists had forecast 3.78 percent, and September’s figure was 3.75 percent.
- 26.36 percent: the increase in air transport prices, the largest among the items El Financiero listed. Electricity rose 18.51 percent and zucchini (calabacita) 23.22 percent.
- 35.58 percent: the monthly increase in tomatillo (tomate verde). Red tomato (jitomate) rose 9.68 percent and eggs 2.16 percent.
- 9.88 percent: the rise in professional services prices. Package tourism services rose 8.72 percent.
- 3.2 percent: annual growth of gross domestic product in the third quarter, the fastest pace since 2023.
Other price changes
Domestic LP gas rose 3.67 percent, and the cost of owned housing rose 0.26 percent, according to the report. The source does not say over what period each of these item-level changes was measured, apart from the tomatillo figure, which it describes as monthly.
The Banxico rate cut
Last week Banxico lowered its benchmark rate by a quarter of a percentage point in a split decision. The move renewed debate over whether policymakers are loosening policy too fast before inflation has returned to the bank’s target of 3 percent, with a tolerance of one percentage point either way.
The bank’s five-member board also changed its forward guidance. It indicated the new rate is likely to stay unchanged for a “prolonged period.” Board members argued that holding borrowing costs at the current level would help inflation move toward the target, while acknowledging that risks to the outlook still lean upward.
Why it matters: rates, growth and prices
October’s reading is above both the forecast and the September figure, and it came right after a rate cut. The benchmark rate influences the cost of loans and credit for households and businesses, so a signal that it will hold steady affects borrowers in the near term.
Stronger economic activity adds to the debate. Banxico has maintained that the economy still operates below its potential, which limits inflation driven by demand. According to the report, sustained strength could make that argument harder to maintain.
Source: El Financiero
