Headline CPI rose by 0.09% in the first half of September, below market expectations of +0.13% according to the Bloomberg median. Core inflation rose by 0.21%, in line with market expectations. On an annual basis, headline inflation fell to 4.66% (from 4.99% in August), while core inflation fell to 3.95% (from 4.00% in August).
Our take: As the gradual disinflationary process continues, accompanied by lower inflation expectations, and the softening of the activity outlook all pave the way for Banxico to continue with a 25-bps policy rate cut in this week's monetary policy meeting. Our base case is for a 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. The CPI print for the month of September will be released on October 9.
