Inflation in Mexico begins the year with pressures, but of a transitory nature, according to the deputy governor of Banxico, Gabriel Cuadra.
International evidence and historical experience suggest that the inflationary shocks expected for the beginning of the year, due to special taxes and tariffs, would have a one-time impact on prices, without contaminating the medium-term trajectory, he said during his participation in a Grupo Financiero Banorte podcast.
The ITAM economist explained that the rebound observed in core inflation during 2025 was mainly driven by temporary increases in merchandise, and that it was not exclusive to Mexico, since the pattern was observed in the United States, the United Kingdom and Canada.
At the end of last year, general inflation stood at 3.69% annually, while core inflation closed at 4.33%, still above the variability range of Banxico’s target. The central bank’s target is 3%, plus/minus one percentage point.
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According to the deputy governor, this level mainly reflected the upward adjustment in merchandise, while services inflation began to moderate towards the end of the year, although with a lag that responds to the economic slowdown.
Regarding services inflation, Cuadra explained that it remained above 5% for almost two years and that its decline was gradual, in part because the prices of this component respond to domestic factors and the lag in economic activity.
“When economic activity weakens, services inflation tends to moderate several months later,” he explained.
Regarding merchandise, the member of the Banxico Governing Board specified that the increase observed in 2025 was not generalized or permanent.
Non-food items were influenced by a normalization after “atypically low” levels recorded at the end of 2024, as well as temporary shocks that put pressure on international references.
Among them, he mentioned the advance of imports in the United States due to the expectation of higher tariffs, which raised the global prices of goods such as medicines and personal care products.
In the case of food merchandise, the increase was associated with the rise in international raw material prices, with a delayed transmission to inflation in Mexico.
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The deputy governor said that one of the main focuses of attention in 2026 will be the changes to the Special Tax on Production and Services (IEPS).
“The generics directly affected by the tax changes represent 2.2% of the basket of the National Consumer Price Index,” which, in principle, limits the direct impact of these measures on general inflation.
He added that in the case of new tariffs on goods from countries without a trade agreement, their impact would be more heterogeneous and deferred, depending on sector exposure, the possibility of substituting inputs and logistical times, so it would not necessarily be immediately reflected in inflation.
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