Mexico Consumer Prices (Mar.)

The further fall in Mexico’s headline inflation rate, to 6.9% in March, confirms that inflation is now on a clear downward trajectory. But services inflation is showing no signs of easing, which will provide plenty of concern for the central bank. While policymakers had hinted that last week’s hike might be the last in this cycle, we think the strength in services inflation will prompt one final 25bp rate increase in May.