Mexico's inflation surge pushes 2026–2027 forecasts above central bank's target
Mexico's inflation outlook has worsened, with analysts now predicting higher price rises in 2026 and 2027. The latest survey by the Bank of Mexico (Banxico) shows revised forecasts for key economic indicators, including growth, interest rates, and the peso's performance. Despite efforts to control costs, the country's 3% inflation target remains out of reach for the next two years.
Analysts have raised their 2026 headline inflation estimate to 3.95%, up from earlier projections. For 2027, the figure now stands at 3.73%. Core inflation, which excludes volatile items like food and energy, is also expected to climb to 4.11% in 2026 before easing slightly to 3.75% the following year. Banxico, however, remains optimistic, forecasting a return to its target range by the third quarter of 2026 and stability over the next 12 months.
Economic growth projections have shifted as well. The consensus for 2026 GDP growth improved to 1.30%, but expectations for 2027 fell to 1.80%. Over the next decade, analysts maintain an average growth forecast of 1.80%. Meanwhile, the peso is seen strengthening, with the year-end 2026 exchange rate revised down to 18.50 per dollar and 19.00 for 2027.
Interest rates are expected to stay high. The interbank funding rate forecast remains at 6.50% for both 2026 and 2027, though analysts predict two benchmark rate cuts in 2026, ending the year at the same level. Concerns linger, with 20% of analysts warning that the business climate could deteriorate over the next six months due to governance challenges and external risks.
Mexico's inflation will likely stay above the 3% target through 2027, according to the latest forecasts. While growth and currency expectations show minor adjustments, interest rates are set to remain elevated. The outlook reflects ongoing uncertainty, with a fifth of analysts anticipating a tougher business environment in the near term.
