The Bank of Mexico (Banxico) closed 2025 with another rate cut, setting the interest rate at 7% and warning to be cautious towards 2026. Biweekly, inflation resulted in a rate of 0.17%, its second consecutive biweekly slowdown, being the lowest inflation for a similar period since 2021. The inflation data is announced days after the last interest rate cut by the Bank of Mexico (Banxico), which placed it at 7% at the end of the year; however, the resistance that the underlying component continues to maintain points to an indicator stagnation, according to experts. In addition, a rebound in annual inflation is anticipated at the beginning of 2026 as a consequence of the effects of tax and tariff increases, which would mainly impact the goods component. Nevertheless, the data remains above general inflation for 14 consecutive biweeks, which is concerning as this item helps to understand the medium and long-term trend. The pressures on the underlying component continue to be explained by the services sector, which was located at 4.38%, mainly due to increases of up to 5.82% in tuition and 5.16% in services related to tourism and food (restaurants, lunch counters, taco shops, etc.). During the first half of December, inflation slowed to 3.72% on an annual basis compared to 3.8% in November and also below market projections that estimated an annual rate of 3.87%. The lowest inflation during this period is explained mainly by the slowdown in agribusiness inflation to 1.16%, within which the fruits and vegetables component fell 5.66%, its thirteenth consecutive biweekly contraction, according to data published this Tuesday by INEGI. In turn, underlying inflation slowed to 4.34% annually, thanks to less pressure from the goods component, which in this biweek was located at 4.29%. In this sense, analysts anticipate that the central bank will moderate the rate cuts in 2026.
