This week concluded with significant economic data both for Mexico and on an international level, including key statements from Jerome Powell, the President of the Federal Reserve, during his participation in the annual Jackson Hole symposium.
Slight Uptick in Inflation During First Half of August
During the first half of August, the National Consumer Price Index (INPC) was recorded at 3.49% on an annual basis, slightly above the 3.48% of the latter half of July, indicating a slight acceleration, according to data released on Friday by Mexico’s National Institute of Statistics and Geography (Inegi).
Compared to the latter half of July, the INPC saw a decrease of 0.02 percentage points.
The INPC measures the variation in prices of a basket of goods and services, directly influencing monetary policy, purchasing power, and interest rate expectations.
With this data, inflation remains within the Banco de México’s (Banxico) target range of 3% ±1 percentage point.
Mexico’s Economy Grows Less Than Expected
Mexico’s Gross Domestic Product (GDP) registered a 0.6% advance in the second quarter of 2025 compared to the January-March period, according to deseasonalized figures released on August 22 by Inegi.
The final performance of Mexico’s economic activity in April-June contrasts with the Inegi’s earlier projection of 0.7%.
With this information, it was confirmed that Mexico’s economy successfully avoided a technical recession, defined as two consecutive quarters of contraction, according to analysts from the Skandia and VeporMás investment funds.
Economic Activity Showed Slight Expansion in June
According to Inegi data, in the sixth month of 2025, the Indicator of Total Economic Activity (IGAE) reported a growth of 0.2% compared to the previous month, slightly higher than May’s 0.1 percentage point growth.
This indicator suggests that monthly advancement was due to increased dynamism in the services sector, which showed a monthly growth of 0.3% after having fallen the previous month.
The IGAE measures overall economic growth and is the broadest reference for Mexico’s economy, used to evaluate the effectiveness of economic policies.
Banxico to Consider Further Rate Cuts: Minutes
The Board of Governors of the Bank of Mexico (Banxico) released the minutes of their latest monetary policy decision on Thursday, showing that four members advised continuing the cycle of rate cuts, while three members emphasized the need for gradual adjustments.
Meanwhile, Deputy Governor Jonathan Heath highlighted the importance of maintaining monetary restraint.
The majority of the Board of Governors of the central bank stressed that they still expect general inflation to converge towards the official target of ±3% in the third quarter of 2026.
Banxico reduced its key interest rate by 25 basis points (pb) to 7.75% earlier in August, a divided decision that brought the rate to its lowest level in three years. Since early 2024, it has been reduced by 350 pb after taking it to a historical maximum of 11.25%.
Retail Sales Declined in June
Mexico’s retail sales decreased by 0.4% during June 2025, losing some ground after advancing 1.7% in May.
Inegi reported on August 21 that the year-on-year variation slightly decreased from 2.4% to 2.3% month-to-month.
Jackson Hole Meeting: Powell Leaves Door Open for Rate Cuts in the US
This penultimate week of August saw attention focused on the Jackson Hole gathering of central bankers on Friday, where US Federal Reserve President Jerome Powell left open the possibility of cutting interest rates, although he warned that risks of higher inflation and a weakening labor market create a complex situation.
“The downside risks to employment are increasing,” said the central banker and warned that changes in trade and immigration policies are affecting demand and supply in the US, complicating distinguishing whether their effect will be cyclical or structural.
Powell made these anticipated statements at the iconic event, which brings together the world’s leading central bankers, including Victoria Rodríguez Ceja, Governor of the Bank of Mexico.
