MEXICO CITY, July 23, 2026 — Mexico’s closely watched core-inflation rate declined to 3.95% during the first half of July, returning within the central bank’s target range.
The Bank of Mexico aims to maintain annual inflation at 3%, allowing a tolerance band of one percentage point in either direction. Core inflation, which removes certain volatile food and energy prices, decreased from 4.12% in the first half of June.
The improvement was stronger than some market forecasts. However, economists continue to identify risks from international oil prices and potential weather-related disruption associated with El Niño.
Separate economic data showed that Mexican economic activity declined during May, with weakness particularly visible in construction.
Why it matters: Lower underlying inflation could eventually provide the Bank of Mexico with greater flexibility on interest rates, but energy and weather risks remain significant.
