Annual inflation reached 4.02% in February due to agricultural prices

The increase in consumer prices in Mexico was 4.02 percent annually in February, driven by the increase in fruits and vegetables, mainly tomato, potato, tomato, lemon and banana, as well as the cost of food outside the home, revealed the National Institute of Statistics and Geography (Inegi).

General inflation in Mexico returned to above 4 percent in February, after seven annual readings within the price stability objective of the Bank of Mexico (BdeM), of 3 percent, whose tolerance is one percentage point up or down.

In February, the National Consumer Price Index (INPC) increased 0.5 percent, to reach an annual variation of 4.02 percent, its highest level since June 2025 and for a second month since 2024, when it stood at 4.4 percent.

The rebound in the general inflation rate, which was above the 3.94 percent estimated by the market consensus, comes from the acceleration of the non-core component, which groups agricultural products, energy and tariffs authorized by the government, from 1.39 percent annually in January, to 2.44 in February.

The underlying prices, which concentrate around 76 percent of the INPC and exclude the most volatile ones, showed a monthly increase of 0.46 percent and an annual jump of 4.5 percent, lower than the 4.52 percent reported in the previous month.

Like the general, the underlying, which determines the trajectory of inflation in the long term, ended at its highest level for a second month since 2024; Likewise, it accumulated 10 annual readings above 4 percent, which is outside the price stability objective set by the central bank.

The main impulse was due to the rebound in food, beverages and tobacco, with monthly inflation of 0.45 percent and annual inflation of 6.2 percent, as well as education and other services, related to food outside the home, which rose 6.04 and 5.2 percent annually, in that order.

Economic analysts are already turning on yellow lights, since underlying inflation is stubbornly above 4 percent and pressures are coming due to the increase in the value of products that the war in the Middle East is causing, since the prices of agricultural products will be leaving low levels, due to their volatility and affected by the war situation, mainly due to the increase in energy prices.

“The rebound in general inflation in February shows an environment of pressures that complicates the convergence towards the specific goal of 3 percent. These pressures come mainly from the non-core component, driven by volatile increases in products such as tomatoes and potatoes, among other fruits and vegetables.

“However, given the observed decrease in underlying inflation despite its persistence, it is anticipated that BdeM could resume the cycle of rate cuts at its meeting on March 26, adopting a more flexible stance. In this context, risks such as recent fiscal adjustments, possible exchange rate impacts and external factors must be cautiously evaluated, which suggests gradualness in the disinflationary process,” described Gerónimo Ugarte, chief economist at Valmex.