Tomato prices in Mexico jumped 30.25% in September, while the basket of 170 goods and services used to track minimum living costs for lower-income households rose 3.29% from a year earlier. Annual inflation reached 3.45%, up from 3.26% in August, the National Institute of Statistics and Geography (INEGI) reported on Thursday, 8 October.
Prices and household costs
Consumer prices overall rose 0.42% from August. Fruit and vegetable prices climbed 4.40% during the month and 8.78% from a year earlier. Onions rose 23.00, and household LP gas increased 3.14%. Tomatoes and onions together added 0.20 percentage points to monthly inflation, nearly half of the total increase, Expansión reported.
Some prices went the other way. Potatoes fell 13.92%, avocados declined 8.11%, and internet, phone and pay-TV bundles dropped 2.06%. INEGI didn't explain the jumps in tomato and onion prices. Whether they would reverse in October remains unclear.
The non-core index, which includes more volatile items, rose 1.20% in September. Annual headline inflation stood at 3.76% a year earlier and at 3.12% in July, before rising for two consecutive months.
Core inflation, which excludes more volatile items, eased to 3.75% from 3.88%. Core prices rose 0.20% in September. Goods inflation within the index slowed to 3.21%, while services inflation slowed to 4.27%. Restaurant and education costs continued rising faster than the headline rate.
Currency and monetary policy
The Banxico FIX reference rate moved from 16.98 pesos per U.S. dollar on Tuesday, 1 September, to 18.11 on Thursday, 8 October. At that rate, US$100 converted to about 1,811 pesos. Banxico listed peso depreciation as an upside risk to inflation: a weaker peso makes imported goods, including goods from the United States, more expensive for Mexican buyers.
Remittances reached US$5.45 billion in August, 3.6% less than a year earlier, according to Banxico data. Producer prices rose 4.05% year over year, signaling costs for U.S. companies buying goods made in Mexico. The figures don't identify how much of those costs businesses passed on to buyers.
Banco de México (Banxico), the autonomous central bank, targets 3% inflation, with a tolerance range of one percentage point on either side. On Thursday, 24 September, it said it expected headline inflation to reach the target in the fourth quarter of 2027.
Banxico's board voted unanimously on 24 September to hold its overnight rate at 6.50%, its third consecutive hold. The rate stood at 10.00% at the start of 2025; the last cut came in May. Minutes published Thursday showed three of the five board members were open to a cut, with one describing it as a possible one-off. The other two urged caution. One warned Banxico might otherwise have to discuss matching Federal Reserve hikes. None of the members open to a cut committed to a date.
Limits of the inflation response
Banxico said Mexican monetary policy “would not have to react mechanically” to Federal Reserve moves because economic conditions differ between the two countries. The Federal Reserve raised its target range by a quarter point in September, to 3.75% to 4.00%, its first increase since July 2023. Citi-surveyed analysts, cited by Expansión, expected Banxico's rate to remain at 6.50% through December.
How much of the peso's recent depreciation may pass through to prices remains unknown. The reported figures include no worker or union response, and they offer no profit figures for companies selling goods affected by the price increases. The Federal Reserve was scheduled to meet on 27 and 28 October. Banxico's next rate decision was due Thursday, 5 November, at 1 p.m. Mexico City time; INEGI was scheduled to publish October inflation on Monday, 9 November.