Mexico's headline inflation fell to 3.12% year-on-year in July 2026, its lowest reading since May 2020, according to INEGI data processed by México ¿Cómo Vamos?. The decline does not extend to services: that component closed at 4.36% and has remained above 4% for more than four years.

July's drop is driven primarily by the non-core component: agricultural prices shifted from a year-on-year change of 7.98% in April to -3.34%, according to México ¿Cómo Vamos? analysis. Core inflation, which excludes energy and volatile food prices, came in at 3.95%, within the central bank's 3% plus/minus one percentage point tolerance band, but broadly flat in recent months. That reading matters for Mexico because the stickiness is concentrated in services, where housing, school fees, lunch counters, and medical consultations coexist, rather than in goods.

Banxico's easing cycle began in March 2024 and concluded in May 2026 with the benchmark rate at 6.50%; in June and August the Governing Board held it unchanged. Services persistence is the factor cited by Deputy Governor Gabriel Cuadra in June: "It is possible that in this environment of economic weakness, services inflation will continue to fall, but we face the risk that the decline will be more gradual than we might think," he told Bloomberg Línea. Within the category, educational services showed the greatest pressure, at 5.93% year-on-year, followed by what are classified as other services, which include lunch counters, fondas, and taquerías, at 4.85%. The central bank postponed convergence to its 3% target: it now expects to reach that level in the fourth quarter of 2027.

The Minutes of the June decision record that one member of the Governing Board raised the possibility of keeping the rate at 6.50% for a prolonged period if services inflation does not decelerate. Upcoming readings for the category will show whether the stickiness begins to ease before the next rate decision.

This article was drafted with artificial intelligence assistance from verified sources and reviewed by a human editor before publication.