Mexico Inflation Slows, Rate Cuts Expected

Mexico's inflation rate slowed slightly to 4.51% in the first half of June 2025, down from 4.62% in late May, though it remains above the central bank's 3% target range. Core inflation, which excludes food and fuel prices, edged up to 4.20%. The moderation in headline inflation was primarily driven by falling fresh food and energy prices, while prices for other core goods and services continued to rise. The Bank of Mexico is expected to continue cutting interest rates, with analysts anticipating a reduction from 8.5% to 8% at the next policy meeting. Mexico's economy expanded by 0.5% month-over-month in April, surpassing expectations despite new U.S. tariffs on Mexican exports. Policymakers are weighing inflation concerns against signs of slowing economic activity.