Bank of America Raises Mexico Inflation Forecast

Economic Outlook Sees Higher Price Increases Than Previously Anticipated

Mexico’s economic future appears to hold a higher inflation rate than initially projected, according to a new forecast from Bank of America. The financial institution has revised its outlook, citing recent data to predict a more challenging price environment for the United States’ southern neighbor.

Revised Inflation Projections

Bank of America now anticipates that Mexico’s inflation will reach 4.6% by the close of 2025. This marks an upward revision from its prior estimate of 4.5% for the same period. The bank has maintained its inflation projections for Mexico for the end of 2026, holding steady at 3.5%.

Underlying Inflation Trends

The institution also adjusted its forecast for core inflation, which excludes volatile food and energy prices. Bank of America projects this key economic indicator to hit 4.4% year-on-year by the end of 2025, slightly exceeding the earlier forecast of 4.3%.

Underlying Inflation to Dip in 2026

Looking ahead to 2026, core inflation in Mexico is expected to moderate to 3.9%. This is a marginal increase from the previously estimated 3.8% for the country. Bank of America attributes these upward pressures on core inflation to factors that will keep it elevated through the remainder of the current year.

However, the bank also points to weaker economic activity and a strengthening currency as factors that will contribute to a reduction in Mexico’s overall inflation in 2026. The peak for underlying inflation is predicted to occur in November of this year, reaching 4.5% before declining to 4% by early 2026.

This persistent high core inflation could pose a challenge for the Bank of Mexico’s plans to cut interest rates in the near term, potentially requiring adjustments to its forward guidance.

Globally, many central banks are navigating similar inflationary pressures. For instance, the U.S. Consumer Price Index (CPI) rose 3.3% in June compared to a year ago, indicating a continued cooling trend but still above many central bank targets (U.S. Bureau of Labor Statistics, 2024).