Background on Inflation and its Impact
Inflation in Mexico has slowed down more than expected during the first half of December, although the underlying index remains above the official target. This slowdown, however, did not prevent Mexicans from experiencing significant price increases in airline tickets and tourism services, as well as in essential items like green tomatoes and sugar.
Inflation Details
According to data from Mexico’s National Institute of Statistics and Geography (Inegi), the National Consumer Price Index (INPC) increased by 0.17% compared to the previous quarter, placing the annual inflation rate at 3.72%.
This places the inflation within the Banco de México (Banxico) target range of 3% ± 1 percentage point and slightly below November’s level of 3.80%.
The underlying inflation, which excludes volatile products like energy and certain fruits and vegetables, rose by 0.31% on a quarterly basis. It saw notable increases in goods (0.13%) and services (0.47%).
The underlying inflation measurement aims to provide a clearer picture of price trends, unaffected by seasonal factors or significant fluctuations in volatile prices.
Meanwhile, non-underlying inflation dropped by 0.30%, with fruit and vegetable prices falling by 1.54% and energy and government-authorized tariffs rising by 0.21%.
At an annual rate, underlying inflation was 4.34%, and non-underlying inflation was 1.71%.
Airfare Prices Surge 38%
During the first half of December 2025, air travel was the product with the most significant price increase, contributing most to overall inflation with a quarterly rise of 38.25%.
Other products that saw considerable price hikes in the first half of December include green tomatoes (+10.69%), packaged tourism services (+9.02%), sugar (+3.36%), and milk (+0.83%).
Conversely, products with the most significant price drops were zucchini (-10.62%), serrano chili (-7.80%), papaya (-6.58%), tomatoes (-4.84%), and bananas (-3.21%).
Banxico Forecasts Further Inflation by Year-End
On December 18, Banxico reduced the interest rate by 25 basis points to 7%, marking the thirteenth occasion since March 2024 (when the rate-cut cycle began) that the central bank has lowered the rate from 11.25%.
During the latest monetary policy announcement, Banxico also raised its inflation projections for the fourth quarter of 2025.
For the October-December 2025 period, Banxico estimates general inflation to be 3.7%, up from the February projection of 3.3%. However, they still expect general inflation to reach the 3% target in the third quarter of 2026.
Key Questions and Answers
- What is the current inflation rate in Mexico? The inflation rate in Mexico has slowed to 3.72% in the first half of December.
- What products saw significant price increases? Airline tickets, green tomatoes, packaged tourism services, sugar, and milk experienced notable price hikes.
- What products saw significant price decreases? Zucchini, serrano chili, papaya, tomatoes, and bananas saw considerable price drops.
- What is Banxico’s inflation projection for the end of 2025? Banxico projects general inflation to be 3.7% for the October-December 2025 period.
- When does Banxico expect inflation to reach its target? Banxico anticipates general inflation will hit the 3% target in the third quarter of 2026.
