Mexico inflation falls below 4% in May, exceeding expectations

Mexico's annual inflation rate decelerated more than expected in May, falling to 3.94% and marking the first time it has dipped below the 4% threshold in three months. This slowdown represents a significant moderation from April's rate of 4.45%.

The decline was primarily fueled by a decrease in non-core inflation, with notable improvements in energy and agricultural prices. The price of tomatoes, a key component in previous inflation surges, no longer ranks among the top 10 products with the highest monthly price increases. Analysts had anticipated a moderation, but the actual figure came in lower than the estimated 4.03%.

On a monthly basis, inflation stood at 0.28% in May. While the overall trend is downward, specific price fluctuations persist. Potatoes and other tubers saw a significant monthly increase of 12.68%. Domestic LP gas prices rose by 2.05%, contrasting with a 7.88% decrease in natural gas. Detergents and chicken also experienced price hikes of 1.96% and 1.52%, respectively. Corn tortillas saw a modest monthly increase of 0.81%, contributing to price adjustments in eateries like loncherías, fondas, torterías, and taquerías.

Conversely, several items saw price reductions. Green tomatoes dropped by 28.73%, while serrano and other fresh chiles decreased by 16.98% and 17.88%, respectively. Electricity prices also fell by 17.88% monthly. The states of Hidalgo, Yucatán, Jalisco, Michoacán, and Veracruz recorded the highest inflation rates, while Sinaloa, Sonora, Baja California Sur, Baja California, and Tamaulipas experienced negative inflation.