Inflation Overview
According to Mexico’s National Institute of Statistics and Geography (Inegi), inflation in 2025 was 3.69% nationally. However, when examining the situation by state, some saw inflation rates exceeding 4%, surpassing Banco de México’s (Banxico) target.
States with Higher Inflation
Inegi’s data reveals that inflation was higher than the national average in 12 states. Out of these, seven surpassed a 4% inflation rate, leading to a more significant erosion of purchasing power for their residents.
- Chihuahua (4.12%)
- Coahuila (4.08%)
- Guanajuato (4.05%)
- Jalisco (4.03%)
- Michoacán (4.01%)
- Nayarit (4.00%)
- San Luis Potosí (3.98%)
In contrast, some states experienced relatively lower inflation rates, with prices remaining stable.
- Tlaxcala (2.19%)
- Baja California Sur (2.34%)
- Baja California (2.44%)
- Tabasco (2.62%)
- Sinaloa (2.75%)
Factors Influencing State-Level Inflation
Gabriela Siller, Chief Economist at Banco Base, explains that state-level inflation varies due to several factors. Economic growth is one such factor; higher growth puts more pressure on prices.
Another factor is the importation of goods. Industrial states have more commercial activity than southern states, making the exchange rate’s impact relatively greater in these regions.
Other factors include weather, affecting agricultural goods, remittances generating more income in certain areas and increasing demand, logistical costs due to geographical location, and even security concerns.
What is Inflation?
Inflation refers to the sustained and widespread increase in prices of goods and services within an economy over a prolonged period. This phenomenon implies a decrease in the real value of money, meaning that over time, each monetary unit can purchase fewer goods and services, as per Banxico.
Why is Inflation Important?
Controlled inflation maintains individuals’ purchasing power while encouraging goods production. Both extremely low and high inflation rates are detrimental; a very low rate discourages merchants from offering goods, while excessively high rates reduce individuals’ purchasing capacity.
What is the Ideal Inflation Level?
The ideal inflation rate should fall within Banxico’s range of 2% to 4%, according to México, ¿Cómo vamos?
Additional Impacts of Inflation
Rising prices not only affect household purchasing power but also reduce saving and investment possibilities, as more money is needed to cover basic expenses. Moreover, if you have money in an account without earning interest, its value diminishes over time.
“When prices rise broadly for a certain period, known as inflation, the purchasing power of money decreases,” states the central bank. “Inflation affects everyone, as it prevents us from planning how much to spend, save, or invest.”
Top 10 Price-Increased Products in 2025
- Chile serrano (64.40%)
- Tostado café (27.58%)
- Otros chiles frescos (27.47%)
- Tomate verde (25.91%)
- Café soluble (23.99%)
- Chuletas y costillas de res (19.30%)
- Vísceras de res: (19.27%)
- Retazo de carne de res (18.45%)
- Bistec de res (17.60%)
- Carne molida de res (16.51%)
- Chocolate líquido (14.48%)
- Limón (13.70%)
- Cortes especiales de res (13.69%)
- Desodorantes personales (12.52%)
- Lechuga y col (12.27%)
Impact on Lower-Income Households
Gabriela Siller believes that lower-income households are most affected by inflation since they have limited options when prices rise. They must either buy less, stop purchasing certain items, or switch to cheaper alternatives.
Cuauhtémoc Rivera, President of the National Alliance of Small Businesses (Anpec), agrees that there’s a “precarization of family consumption,” where price remains the primary concern, especially for lower-income groups.
“People consume based on price and are increasingly forced to buy items they don’t prefer but can afford,” Rivera explained. “For example, they buy more granulated rice, sugar, and beans because purchasing them in bags is too expensive.”
Key Questions and Answers
- What is inflation? Inflation refers to the sustained and widespread increase in prices of goods and services within an economy over a prolonged period.
- Why is controlled inflation important? Controlled inflation maintains individuals’ purchasing power while encouraging goods production. Extremely low or high inflation rates are detrimental.
- What is the ideal inflation level? The Bank of Mexico (Banxico) recommends keeping inflation within a range of 2% to 4%.
- Which products saw the highest price increases in 2025? The top 10 price-increased products included chile serrano, tostado coffee, various fresh chilies, green tomatoes, soluble coffee, beef chops and ribs, res residuals, beef sirloin, ground beef, liquid chocolate, lemons, specialty beef cuts, and personal hygiene products like deodorants.
- How do lower-income households get affected by inflation? Lower-income households are more vulnerable to price increases, as they have limited options and must adjust their consumption habits or forgo certain items.
