2025/09/24 | Julia Passabom & Mariana Ramirez
Bi-weekly headline CPI for the first half of September was 0.18%, between Bloomberg’s market consensus of 0.17% and our forecast of 0.19%. Core inflation came in at 0.22%, slightly above the market's expectations of 0.20% and in line with our forecast. Within the core component, tradable prices rose by 0.23% 2w/2w, up from the previous fortnight's 0.14% due to inflation in non-food merchandise. Services prices increased by 0.20% 2w/2w, up from the previous data of 0.13% driven by the 2025-2026 school year, which represents a shift from the traditional August start. However, other services showed a deflation of 0.12% due to professional services and air transportation. The non-core component increased by 0.03% 2w/2w due to deflation in energy prices of 0.04%, and some pressures coming from livestock (0.24%), in items such as chicken and beef.
In annual terms, headline inflation was at 3.74% in 1H September, remaining below the 4% threshold since the second half of April. Core CPI was relatively stable, moving slightly to 4.26% now, with tradables at 4.19% (up from 4.13%) and services at 4.32% (down from 4.36%). Core measures continued to show a significant relief: core CPI is at 4.03% 3MMA SAAR, with tradables at 3.74% and services at 4.14%. Within services, the pressure continued to ease in other service categories.
Our take: Today’s report showed no major surprises and a significant improvement in core inflation dynamics, which remains above 4% year-over-year, but is considerably better at the margin. The CPI data is good news for Banxico, with improvements in services inflation, which is the stickier component inside core inflation. We forecast CPI to end 2025 at 4.1% and 3.7% in 2026. Regarding the policy rate, our current scenario anticipates another 25-bp cut by Banxico tomorrow (forward guidance in plural), followed by another 25-bp cut in November and December, with the terminal rate at 7.0 for 2025 and 6.5% for 2026.
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