Key facts
- Mexico's annual inflation rate slowed to 3.10% in early July, below the 3.12% forecast.
- Core inflation fell to 3.95% in the 12 months through early July, returning to the Bank of Mexico's 2-4% target range.
- Mexico's economy contracted 0.3% in May compared to the same month a year earlier.
- The secondary sector, particularly construction, declined 3.7% in May.
- The primary sector also posted a decline in May.
Mexico's annual inflation rate slowed more than anticipated in early July, reaching 3.10% and marking the eighth consecutive period of deceleration. This figure undershot the 3.12% median estimate from economists surveyed by Reuters. The closely watched core price index, which excludes volatile food and energy items, also eased, rising 3.95% in the 12 months through early July, down from 4.12% in the prior period. This brings core inflation back within the Bank of Mexico's target range of 2% to 4%.
However, official data showed that Mexico's economy contracted 0.3% in May from April, driven by declines in the secondary sector, particularly construction, which fell 3.7%, and the primary sector. This contraction follows a revised 1.4% expansion in April, which was the largest monthly increase in over five years. On an annual basis, the economy grew 1.1% in May, below the forecast of 1%.