Inflation in Mexico slowed to 3.69% at the end of 2025, but experts predict it will exceed 4% throughout 2026 due to the World Cup, wage hikes, new taxes, and tariffs. Factors like IEPS increases and duties on Chinese imports will pressure prices, particularly in services and goods. The Bank of Mexico may implement moderate interest rate cuts, adopting a cautious policy.
Inflation in Mexico ended 2025 at 3.69%, the lowest since 2020, driven by a drop in fruit and vegetable prices (-5.62%) and low growth in energy costs (0.18%). However, the underlying component accelerated to 4.33%, with rises in food and beverages (5.22%) and services (4.35%). This marked six months within the Bank of Mexico's 3% ±1 percentage point target range.
For 2026, analysts agree that general inflation will end between 4.1% and 4.2%, while underlying inflation reaches 4.3% to 4.4%. Ernesto Revilla of Citigroup warned it will be the sixth consecutive year outside the 3% target, highlighting pressures from the 2026 World Cup, which will raise service prices, such as Monterrey tickets comparable to flights to Europe. Carlos Capistrán of Bank of America noted that wage increases exceeding productivity keep service inflation high, despite a negative output gap.
Other factors include new tariffs on Chinese products, partially offset by peso appreciation, and IEPS adjustments on sodas and tobacco. Mexico's historical average inflation is 4.2%, and Revilla regretted the loss of credibility in Banxico's monetary policy. Bancoppel and Monex foresee volatility in the first quarter due to seasonal factors, but subsequent stability with moderate growth.
In response, experts like Gerónimo Ugarte of Valmex estimate total cuts of 50 basis points in the reference rate, closing at 6.50%. Alberto Ramos of Goldman Sachs urged caution amid high underlying inflation and fluctuating expectations.
