Mexico’s early July inflation hits 3.55%, back inside central bank target

Mexico’s annual inflation slowed to 3.55% in the first half of July, moving back within the central bank’s target range and raising expectations for further interest rate cuts.

Data released Thursday by the national statistics agency showed consumer prices rising 0.15% in the first two weeks of the month compared to the previous period. The 12-month inflation rate fell from 4.51% a month earlier.

The Bank of Mexico targets inflation at 3%, with a tolerance range of one percentage point above or below. In June, the bank cut its key interest rate by 50 basis points for the third straight time, bringing it to 8.5%, its lowest level since August 2022.

The core inflation index, which excludes volatile items like food and energy, also rose 0.15% in early July. The annual core rate came in at 4.25%, compared with 4.28% in mid-June.