Mexico’s inflation rises to 3.75% after surprise rate cut

Mexico’s annual inflation rose to 3.75% in October from 3.45% in September, accelerating for a third consecutive month. The increase exceeded economists’ expectations and came days after Banco de México unexpectedly cut its benchmark interest rate to 6.25%. The central bank described the cut as a one-off adjustment and signalled it would keep borrowing costs at the new level for an extended period.

Electricity prices lift the headline rate
Consumer prices rose 0.65% in October from the previous month, up from a 0.42% increase in September. The end of seasonal electricity subsidies in 18 cities accounted for about a third of the monthly rise. Electricity prices increased 18.51% over the month, while air fares and some food prices also rose.

Core inflation, which excludes more volatile items such as energy and fresh produce, rose to 3.80% from 3.75% in September. Services prices were 4.32% higher than a year earlier, compared with a 3.25% rise for goods. Headline inflation remained within the central bank’s tolerance band of 2% to 4%, but moved further above its 3% target.

Central bank signals a pause
Banco de México’s board voted three to two on 5 November to lower the benchmark rate by a quarter of a percentage point. The two dissenting members favoured keeping it at 6.50%. The board said it saw little pressure on prices from domestic demand, even as the economy continued to expand in the third quarter.

Before the October figures were released, the central bank had already raised its inflation forecast for the final quarter of 2026. It still expects headline inflation to reach 3% in the final quarter of 2027. The next readings will show whether price growth slows once the seasonal electricity adjustment passes and whether services inflation begins to ease. Both will matter as policymakers assess how long to hold the benchmark rate at 6.25%.

Newshub Editorial in North America – 10 November 2026