By Natalia Siniawski
(Reuters) – Annual inflation in Mexico slowed for the seventh consecutive month in August to 4.64%, in line with market expectations and its lowest since March 2021, while core inflation also came to a 20-month low, data from statistics agency INEGI showed on Thursday.
Headline inflation’s downward edge was driven by softer core price pressures, but with inflation in the services sector still proving stubborn, the central bank is still unlikely to kick off an interest-rate easing cycle soon, Capital Economics analyst Jason Tuvey said.
Annual core inflation in August, considered a better gauge of price trends because it excludes some highly volatile items, was 6.08%, its lowest level since December 2021 and below market forecasts of 6.12%.
That drop was off the back of lower core goods inflation, Tuvey said, while services inflation – which central bank board members have described as “sticky” – remained above 5% year over year.
The Bank of Mexico voted last month to keep its benchmark interest rate steady at a historic high of 11.25%, with board members suggesting it will stay at that level for an extended period to bring inflation to its target of 3% plus or minus one percentage point.
 Consumer prices rose 0.55% in August from July, according to non-seasonally adjusted figures, above the expected 0.52%.
The closely watched core price index, which strips out some volatile food and energy prices, rose 0.27% during the month.
“Overall, the disinflation story in Mexico is continuing, despite a resilient labour market and solid wage growth,” said Pantheon Macroeconomics’ Chief Latin America Economist Andres Abadia.
Lower input prices, weakening growth momentum in key economic sectors and the lagged effect of elevated real interest rates are helping to push down inflation, Abadia added.
(Reporting by Natalia Siniawski; Editing by Kylie Madry and Frances Kerry)
