Mexico's annual inflation rate slowed to 3.51% in July 2025, marking its lowest level since December 2020 and continuing a two-month decline from 4.32% in June, according to data released by Inegi. The deceleration was driven primarily by a notable decrease in prices of agricultural products, especially fruits and vegetables. Despite the overall moderation, analysts anticipate inflationary pressures in August and September due to the back-to-school season. Meanwhile, the underlying inflation index remains above the central bank's official target. Industrial production in Mexico showed signs of weakening in the first half of 2025, with May figures indicating a 0.4% month-over-month decline in seasonally adjusted terms and a 0.1% year-over-year decrease in non-seasonally adjusted terms. Manufacturing production increased slightly by 0.7% year-over-year in May. The industrial sector experienced a marginal 0.1% contraction in June compared to May, reflecting ongoing challenges in economic activity. The inflation trend is expected to see a slight uptick in August due to lag effects but is projected to decline in subsequent months.