Bank of Mexico says inflation taking longer than expected to descend

The Bank of Mexico said on Wednesday that inflation is taking longer than initially anticipated to return to its target, in large part due to the persistence of core inflation.

Banxico, as Mexico's central bank is known, forecast that annual headline inflation would hit 4.9% in the fourth quarter 2023, up from a prior projection of 4.1%. The upward revision in the forecast trajectory for inflation "is fundamentally due to the fact that core inflation has not shown favorable dynamics and has been displayed more persistence than expected," Banxico said it its quarterly report.

Inflation is now seen nearing Banxico's 3% target, plus or minus one percentage point, by the fourth quarter of 2024, a full quarter later than previously anticipated.