Monthly headline CPI rose by 0.01% MoM, below market expectations of +0.07% according to the Bloomberg median. Core inflation rose by 0.22%, essentially in line with market expectations of 0.23%. On an annual basis, headline inflation fell to 4.99% (from 5.57% in July), while core inflation fell to 4.00% (from 4.05% in July). Our seasonally adjusted 3-month annualized headline inflation metric came in at 5.46% (from 6.85% in July), while core inflation rose by 2-bps to 3.22% (from 3.2% in July).
Our take: Even though the MXN has depreciated by roughly 5% over the past month, the gradual disinflationary process, incremental declines in inflation expectations, and the softening in the activity outlook pave the way for Banxico to continue with a 25-bps policy rate cut in the next monetary policy meeting (September 26). Our base case is for 25-bp rate cut in each of the remaining meetings this year, down to 10% by yearend. We expect CPI to end the year at 4.3%, essentially in line with Banxico’s 4.4% 4Q24 average.
