Mexico's consumer price index (CPI) quickened to an annual 3.77% in February, as deceleration in agriculture prices was offset by faster inflation in services prices. Headline inflation rebounded from a four-year low of 3.59% in January, but held for a sixth consecutive month within the central bank's target range of 2% to 4%.

The result, reported by statistics agency Inegi on 7 February, was slightly below the 3.76% median estimate from 38 analysts polled in Citi Research's 5 March survey. Fruit and vegetable prices contracted 5.54% in February after a 7.73% contraction in January, which more than offset the 5.71% inflation in egg prices driven by bird flu containment. However, services inflation of 5.53% in February, up from 5.25% the prior month, with notable increases in higher education prices, was not overcome.

Despite the higher headline rate, Mexican bank Banorte said the inflation trend remains favorable, with short-term climate conditions suggesting fruit and vegetable prices may be less volatile in the coming months. Banorte confirmed its call for the central bank to issue a second consecutive half-point cut to its target interest rate on 27 March, which would take it to 9% from 9.5%.

Banorte also noted stability in Mexico's core inflation, which excludes volatile energy and food prices, to 3.65% in February from 3.66% the previous month. Meanwhile, energy inflation eased to 3.74% in February from 6.34% the previous month, with electricity inflation easing to 5.07% from 5.32% in January.

The trend for energy inflation is "encouraging," said Banorte, noting the recent OPEC+ move to gradually raise production from April, helping to lower international reference prices. The bank also cited the recent agreement between President Claudia Sheinbaum and gasoline dealers to cap low-grade fuel at Ps24 per liter ($4.46/gallon).