Inflation Forecast 1h – Nov

We expect inflation for the first half of November to come in at 0.44% bw, in a context marked by the withdrawal of the summer electricity subsidy and higher public transportation costs—effects that should be partly offset by the downward pressure associated with the Buen Fin discount program.

Typically, inflation in the first half of November stands around 0.51% bw. The reading for this period is higher than those observed in recent months due to the seasonal increase in electricity prices following the removal of the summer subsidy. This component alone would contribute roughly 31 basis points to headline inflation.

Adding to this effect is the recent increase in public transit fares in Mexico City, where prices rose by nearly 18%. This adjustment would bring the public transportation component to a variation of 3.0% bw, well above the 0.04% bw typically observed during this period.

As a result, we expect the non-core component to rise 1.9% bw, compared with the 1.7% bw historical average for this period.

However, part of these upward pressures should be offset by discounts linked to the Buen Fin program—Mexico’s version of a Black Friday–style shopping event—held this year from November 13 to 17. Since these dates fall within the first half of the month, most of the markdowns will be captured in this period’s data. In this regard, we expect non-food goods inflation, the category most exposed to the event, to come in at –0.35% bw, compared with a historical average of +0.04% bw. For core inflation, we estimate a variation of 0.01% bw.

With this, annual headline inflation would increase from 3.50% to 3.58%; core inflation would ease from 4.32% to 4.29%, while non-core inflation would rise from 0.8% to 1.25%.

In this scenario, inflation would mark nine consecutive biweekly readings within Banco de México’s target range, preserving the room for another policy rate cut in December, with a projected year-end level of 7.0%.

This is consistent with the signals from Banco de México’s latest monetary policy minutes, in which several Board members acknowledged the possibility of continuing to ease the policy rate gradually, supported by stable inflation dynamics, the continued weakness in economic activity, and a broadly stable exchange rate.