❗️🇲🇽Cable FX Macro Weekly Note: Mexico August Consumer Prices

**As seen in Risk In The Week report 09/07/25, get full access now!

Headline inflation eased to 4.58% year-over-year (y/y), down from 4.62% in July, while the monthly increase was 0.24% (seasonally adjusted). This marks the lowest y/y rate since February but remains above Banxico’s target range of 3% ±1%. Core inflation (excluding volatile food and energy) ticked up slightly to 3.82% y/y from 3.80% in July, signaling sticky domestic pressures from wages and services.

The report comes ahead of Banxico's September 26 monetary policy meeting, where markets now price in a 75% chance of a 25 basis point (bp) rate cut from the current 10.00% target, down from near-certainty pre-release due to the core uptick. Economists attribute the headline slowdown to base effects and lower energy costs, but warn of upside risks from nearshoring-driven demand and potential U.S. tariff spillovers under the Trump administration.

For this month, core inflation is expected to show signs of easing while economists forecast the headline to pick up its pace. Economists at Wells Fargo noted that a factor that could add upward pressure is the recent infestation of meat supplies with screwworms, which has driven up prices and may show up more prominently in the August data. Wells Fargo warned that if inflation remains contained, the August CPI print could support our expectations for one final 25 bps rate cut in September, bringing the Overnight Rate to 7.50%.