This structural change puts upward pressure on wage costs and complicates disinflation in the service sector. In this context, Citi projects that underlying inflation will be at 4.4% in 2026, above the market consensus of 3.92%. This effect is strongly passed on to services, which have a very labor-intensive cost structure. Inflation rebounds to 3.8% and challenges the projections of the Bank of Mexico. A key data point to understand this process is that the minimum wage has ceased to be marginal within the formal labor market. Although this is a one-time increase, its effect will be felt in annual inflation until January 2027, with an impact concentrated in the prices of goods. This is compounded by the risk of new pressures derived from tariffs on China, which could make imported products more expensive and be passed on to internal prices. All of this set of factors makes underlying inflation tend to become more persistent for 2026. Today, about 20% of formal workers earn the minimum wage, when a decade ago this percentage was below 5%. This structural change puts upward pressure on wage costs and complicates disinflation in the service sector. On the goods side, inflation has begun to show a rebound, adding forward-looking risks. This calendar difference "muddies" the number and removes the signal about the real trend of prices. This does not mean that inflation is not persistent, especially the underlying indicator, which continues to show greater resistance to falling and is located above the Bank of Mexico's target. Today, about 20% of formal workers earn the minimum wage, when a decade ago this percentage was below 5%. According to Julio Ruiz, Citi's chief economist, the annual comparison is distorted because last year the promotions were concentrated in the second half of November, while this year it was the other way around. Within this component, the main problem is service inflation. According to Citi's chief economist, this dynamic is very closely linked to the labor market. However, more and more analysts are beginning to revise their estimates upwards, precisely because of these risks that make a faster drop in prices more difficult. Inflation higher than expected in the second half of November has a specific explanation: the discounts of the Buen Fin. At Citi, they warn that these risks could intensify in 2026. The recovery of formal employment and, above all, the accumulated increases in the minimum wage in recent years are having a direct impact on average wages. The first is the application of the IEPS at the beginning of the next year.
