Inflation in Mexico accelerated again last November, driven by the rise in agricultural products and services such as electricity, after the decrease shown in October, when it stood at 3.57% year-on-year, according to data published this Tuesday by the National Institute of Statistics and Geography (Inegi) .

According to the  National Consumer Price Index (INPC) , which measures the variation in prices of a basket of goods and services, in the eleventh month of the year this indicator stood at  3.80% in its annual measurement .

According to the  Financial Group Ve por Más (BX+) , year-on-year inflation reached a five-year high, and also represented its largest variation for the same month since 2021.

Meanwhile, the  core price index  – which does not take into account the most volatile goods and services –  increased  0.19% monthly and 4.43% annually , with a decrease in the prices of goods of 0.03% and an increase in the prices of services of 0.39% on a monthly basis.

The underlying asset advanced for the third consecutive reading, posting its biggest expansion since March 2024 and marking seven months above 4%, explained BX+.

The  non-core price index  —which includes goods and services whose prices are subject to fluctuations, such as weather conditions—  rose 2.28% month-on-month and 1.73% year-on-year . Within this index, fruit and vegetable prices increased 3.49%, and energy and regulated tariff prices rose 2.97% month-on-month.

In the penultimate month of the year, the products that showed the greatest price increases were serrano peppers with a 24.76% rise, electricity with 20.70%, zucchini with 17.05%, tomatoes with 14.34%, and public transportation with 4.90%.

Conversely, the products with the greatest decrease in their cost during the cycle were  lemon with 7.46%, avocado  with 7.28%,  orange with 3.97%, potato and other tubers  with 3.68% and tequila with a decrease of 2.65 percent.

Among the  states with the largest increases in the National Consumer Price Index (INPC) are Sonora, Sinaloa, and Baja California Sur. Meanwhile, Durango, Quintana Roo, and Yucatán were among the states with variations below the national average.

According to BX+ analysis, although year-on-year growth in the CPI is expected to close the year below 4%, in a context of slow economic dynamism, the inflationary outlook is still complex.

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At the start of 2025, the Mexican economy technically avoided a recession thanks to a slight rebound in GDP (0.2%) , but it shows clear signs of a generalized slowdown, said Alejandro Saldaña, chief economist at Grupo Financiero Ve por Más (Bx+) , during the webinar Advantages for Mexico in a Changing Environment .

“The fact that we’re not in a recession doesn’t mean the economy is healthy. There’s weakness in virtually every sector, except for agriculture and some food-related manufacturing and exports,” he noted.

He explained that the rebound in Mexican exports in the first quarter was largely due to an advance in shipments to the United States following President Trump’s announcement of new tariffs, which generated a temporary positive effect on the industry.

From a spending perspective, the slowdown is more evident, as private consumption, especially of imported goods, has cooled after two years of strong growth.

“Consumers have become more cautious due to slower job creation, persistent inflation, and economic uncertainty,” Saldaña noted.

Gross fixed investment also weakened, especially in public construction, affected by the completion of flagship projects from the previous six-year term and a fiscal consolidation policy that cuts programmable spending.

On the other hand, the specialist indicated that private investment , although more stable, also shows signs of cooling.

In this sense, with a fiscal deficit that the Treasury is seeking to aggressively reduce this year, and without significant surpluses from the Bank of Mexico (Banxico) , the space for fiscal stimulus is narrow.

On the monetary side, although Banxico has begun to reduce rates, Saldaña warned that the scope for further cuts is limited.

“Inflation remains far from the 3% target, with upside risks from the exchange rate, higher labor costs, and low productivity. This forces the central bank to maintain a relatively restrictive stance for longer,” he said.

Despite the complex outlook, the Bx+ economist emphasized that Mexico maintains solid macroeconomic fundamentals : prudent fiscal policy, the autonomy of the Bank of Mexico, robust international reserves, and a relatively balanced current account.

Furthermore, on the trade front, Mexico benefits from greater relative competitiveness against China in the US market, due to lower effective tariffs and the depreciation of the peso, which has absorbed some of the external shocks.

“Although uncertainty persists, especially due to U.S. trade policy and possible internal institutional changes, Mexico retains anchors that help navigate the volatile environment,” he emphasized.

Likewise, despite the slowdown in activity, Saldaña said the labor market remains stable, with an unemployment rate of just 2.6% and real wages on the rise.

This could sustain basic consumption in the short term, although structural risks persist due to rising labor costs without equivalent improvements in productivity.

“The cost per worker has risen, while output per worker has fallen. This puts pressure on inflation and complicates monetary policy decisions going forward,” he explained.

Forecasts for 2025

Ve por Más estimates that GDP will grow just 0.5% in 2025. Inflation could stagnate around 3.8%, while the benchmark interest rate could close slightly below 8%; and the exchange rate, for its part, could consolidate above 20 pesos per dollar.

“An economic recovery will depend on greater clarity in the trade outlook and a sustained reduction in uncertainty, which could revive investment, employment, and consumption toward the end of the year,” Saldaña concluded.

In this context, Bx+ analysts reiterate their target price for the S&P/BMV IPC (Price and Quotation Index) at 61,969 points by the end of 2025, supported by expected earnings growth of 6.5% and a valuation that remains competitive compared to other global markets.

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BX+ Financial Group presented its analysis of economic prospects for Mexico , highlighting a complicated outlook for 2024 and 2025.

Alejandro Saldaña, chief economist at the firm, warned of slowing growth, persistent institutional uncertainties and structural adjustments that will limit economic expansion.

“We will hardly be able to sustain the rebound observed in the third quarter of 2023. Monetary and fiscal conditions are not helping growth, and uncertainty remains a significant brake on investment,” Saldaña said at a press conference. 

In this regard, the financial group revised downwards the GDP growth projections for 2024 and 2025 , placing them at 1.3% and 1.2%, respectively, after 3.2% in 2023.

Moreover, although the labour market has shown resilience, with an unemployment rate of 2.8%, wages are growing faster than productivity, creating inflationary pressures.

In this way, the specialist pointed out that, although inflation could close at 4.5% in 2024 and 3.8% in 2025, it will continue to be a challenge for the economy . 

In the stock market sector, analyst Alejandra Vargas indicated that the Price and Quotation Index (IPC) presents an attractive assessment for long-term investors , with a discount of 17.6% compared to its historical average.

However, the projected closing price for 2024 is 52,250 points, reflecting a drop compared to previous estimates. “It is an opportunity for those who can take risks amid volatility,” said Vargas. 

Private consumption faces a mixed outlook. Ariel Méndez, a consumer and stock market analyst for the firm, highlighted a 7.5% contraction in 2023, although the increase in the minimum wage could sustain certain segments in 2024.

Meanwhile, the financial sector showed revenue growth of 14.8% , but a moderation is anticipated for next year. 

Experts also pointed out that external factors, such as the return of Donald Trump to the presidency of the United States , could intensify the pressure on Mexico, affecting trade relations and other bilateral aspects.

“It is a challenging environment, but not a catastrophic one. Mexican companies have solid fundamentals, and investors will find long-term opportunities,” Vargas concluded.

Experts agreed that, although the outlook is uncertain, Mexico has elements of stability that can cushion some economic impacts in the coming years. 

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The National Institute of Statistics and Geography (INEGI) has released the results of the National Consumer Price Index (INPC) for the first half of May 2024, revealing a significant increase.

The annual general inflation stood at 4.78%, driven mainly by the increase in prices of agricultural and energy products.

Although the INPC decreased by 0.21% compared to the previous half due to the implementation of warm-season electricity tariffs in 11 cities in the country, this decline is lower than that recorded in the same half of the previous year, which was -0.32%.

The core price index, which excludes the most volatile components such as food and energy, showed an increase of 0.15% biweekly and 4.31% annually.

Within this index, the prices of goods increased by 0.11%, while services increased by 0.20%.

On the other hand, the non-core price index, which includes volatile components, recorded a biweekly decrease of 1.31% but an annual increase of 6.27%. In this category, agricultural product prices rose by 0.43%, and prices of energy products and government-authorized tariffs decreased by 2.86%.

In that regard, Grupo Financiero BX+ provided its analysis on consumer inflation in the first fortnight of May 2024, indicating a 4.78% annual growth, slightly below its projection of 4.81% and above the consensus of 4.75 percent.

In the analysis, they highlighted that year-on-year inflation accelerated, reaching its highest level since the second fortnight of January. They explain that this increase was driven by rises in agricultural and energy prices, although the underlying index grew at its slowest pace in three years. The variation in goods continued to decelerate, while services did not show a clear inflection point.

Bx+ also emphasized the implications of this data for future monetary policies, suggesting that an adjustment in the target rate of the Bank of Mexico could occur in June, provided that upcoming inflation readings show less pressure and some risks on the economic outlook dissipate.

In the study, they explain that the usual fortnightly decrease in May was mainly attributed to warm-season electricity tariffs, although the decline was smaller compared to the same period last year, due to increases in agricultural products and gasoline.

Regarding the year-on-year variation, BX+ comments that it increased for the third consecutive fortnight, marking its highest variation since January, driven by the dynamism of the non-core components, particularly agricultural and energy products.

They also explain that the core index grew at its slowest pace since May 2021, with a continued slowdown in goods, due to the dilution of previous shocks such as the pandemic and the war in Ukraine, as well as currency appreciation. Services, on the other hand, showed a marginal acceleration, especially in housing, although the rest of the services experienced minimal declines.

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