Mexico's annual inflation slows more than expected in early December

By Aida Pelaez-Fernandez

MEXICO CITY, Dec 23 (Reuters) - Mexico's annual inflation slowed more than expected in the first half of December, official data showed on Tuesday, but an uptick is expected in January.

Consumer price rises eased to 3.72% from 3.99% in the second half of November and landed below the expectations of economists polled by Reuters who had forecast it to come in at 3.85%.

Basic foods such as tomatoes, eggs, and chicken saw the biggest price drops, the national statistics agency said.

The slowdown in the inflation rate "interrupted the upward trend that would resume in January," economists at Banamex said in a note.

Mexico's central bank cut its benchmark rate last week by 25 basis points, bringing it down to its lowest level since April 2022, despite indicating an increase in near-term inflation risks.

Banxico's board also raised its own inflation projections for the first two quarters of 2026 and the fourth quarter of 2025, with analysts seeing the guidance change as a sign that it could interrupt its monetary easing cycle.

The closely watched core price index, which strips out some volatile food and energy prices, reached 4.34% in the 12 months through early December, also landing below expectations but still above the Bank of Mexico's target of 3% +/- one percentage point.

Analysts surveyed by Reuters saw annual core inflation at 4.43%.

Month-on-month consumer prices rose 0.17% during the first half of December, also below the 0.3% increase expected by economists in the poll, while the core price index climbed 0.31%.

In a separate statement, INEGI reported that Mexican exports declined 3% in November when adjusted for seasonal swings, leading to a $274 million trade deficit.