Although the country’s annual inflation slowed to 3.57% last October, spending four months within the Bank of Mexico’s target range (3% +/- one percentage point), not all states followed this trend.
According to data from the National Institute of Statistics and Geography (INEGI), of the 32 federal entities, five showed acceleration in their National Consumer Price Index (INPC) in October 2025, that is, they traced a trend contrary to that of the country.
These states were Aguascalientes, Yucatán, Chihuahua, Baja California and Sonora, although of this group, only two exceeded the 4% threshold: Aguascalientes and Chihuahua, each with an annual inflation of 4.08 percent.
In addition, seven entities registered an annual inflation higher than 4%, detracting more strongly from purchasing power: San Luis Potosí (4.48%), Oaxaca (4.40%), Durango (4.11%), Aguascalientes (4.08%), Chihuahua (4.08%), Nayarit (4.07%) and Tamaulipas (4.01 percent).
“The dynamics of the second fortnight and the possible effects of the recent rains could impact prices on the margin. We must remember that the rains were concentrated in Veracruz, Hidalgo, Puebla, San Luis Potosí and Querétaro. These states are important producers of goods such as zucchini, onion, chili peppers, avocado and cilantro, among others,” explained Banco Base.
The financial group estimates that inflation at the end of the year will be 3.87% annually. Despite this, it points out that upside risks to inflation remain, as downward pressures come mainly from non-core inflation, while core inflation remains above 4% and there are no clear signs that it could begin to slow down soon.
It is worth remembering that underlying inflation is what determines general inflation in the medium and long term, so its high levels should not be underestimated.
On the positive side in terms of the purchasing power of households, 25 states presented an annual inflation of less than 4% during October of this year, however, it shows economic weakness in the majority of the Mexican territory.
Tlaxcala was the entity with the lowest inflation level, 1.83%; They were followed by Baja California Sur, Puebla, Morelos, Sinaloa, Tabasco and Sonora, below 3 percent.
The monetary impact
For Banco Base, due to low inflation, it would be prudent for Banco de México to pause its interest rate cuts, keeping it at 7.25%, its current level until underlying inflation shows clear signs of slowing down.
“(Recently) Banxico cut its interest rate by 25 basis points to 7.25%, in line with market expectations, cutting a total of 400 basis points since the cut cycle began in March 2024 and 275 basis points so far in 2025. The Governing Board indicated that it is appropriate to cut the interest rate considering the behavior of the exchange rate, the weakness of economic activity and the possible impacts of changes in trade policy at a global level,” he explained.
He adds that the decision was not unanimous, as Deputy Governor Jonathan Heath voted to keep the interest rate at a level of 7.50%. “Considering that the interest rate of the Bank of Mexico is 7.25% and that the inflation expectation for the next 12 months is 3.87%, the real ex ante rate is 3.25%. With this, the real ex ante interest rate enters the range estimated by the Bank of Mexico for the real neutral rate, between 1.8% and 3.6 percent”
