Inflation 2h–Nov: increase driven by Buen Fin and agricultural products

For the second fortnight of November, inflation stood at 0.24% bw, supported by the rebound in merchandise prices following “Buen Fin” discounts and renewed pressures in agricultural products. On an annual basis, November inflation reached 3.80%, maintaining scope for another rate cut by Banco de México.

The figure was broadly in line with our 0.23% bw estimate and above the 0.07% bw expected by consensus. This fortnight saw stronger pressures in both the core component (0.17% bw vs. 0.03% bw historically) and the non-core component (0.50% bw vs. 0.13% bw historically).

Within the core index, goods (0.21% bw vs. –0.02% bw historically) recorded a rebound due to the return of prices after the “Buen Fin” discounts. The largest increases were observed in Table Wine (10.4% bw), Rum (8.4% bw), and Brandy (6.9% bw).

Meanwhile, the non-core component rose 0.50% bw (vs. 0.13% bw historically), driven by a 3.78% bw increase in fruits and vegetables (vs. 0.33% bw historically). This index has now accumulated three consecutive fortnights of increases, following the normalization of the rainy season, which had benefited agricultural products during the first half of the year. The most significant price increases were recorded in Serrano Pepper (32.6% bw), Tomato (20.3% bw), and Zucchini (14.3% bw).

With this information, annual headline inflation rose from 3.57% to 3.80% in November; core inflation increased from 4.28% to 4.43%, while non-core inflation moved up from 1.18% to 1.73%.

In this context, despite the uptick in inflation, we continue to expect a 25 bp rate cut by Banco de México at its upcoming meeting on December 18. This would bring the policy rate to 7.00% by year-end.

Looking ahead, we expect Banxico to pause during the first half of 2026, given the rebound in inflation anticipated early next year following the increase in the IEPS and the potential implementation of tariffs on imports from countries with which Mexico does not have a trade agreement.

For now, we maintain our expectation of two rate cuts in the second half of 2026, which would bring the policy rate to 6.50% by year-end.