A woman shops at a supermarket in Ciudad Juarez, Mexico, October 7, 2025. REUTERS/Jose Luis Gonzalez

By Aida Pelaez-Fernandez

MEXICO CITY (Reuters) -Mexico's annual inflation rate quickened in September at a pace slightly below expectations, official data showed on Thursday, but remained within the central bank's target range of 3% plus or minus a percentage point.

Consumer prices in Latin America's second-largest economy rose 3.76% in the year through September, according to national statistics agency INEGI, below the 3.79% increase forecast by economists in a Reuters poll. Consumer prices rose 3.57% in the previous month.

The inflation rate remained within the central bank's target range for the third month in a row, bolstering expectations that policymakers would continue to cut interest rates.

"Current conditions support our expectation of a Banxico benchmark rate of 7.00% at year-end and 6.50% in 2026," analysts at the brokerage of local bank Banorte said in a note.

Mexico's central bank, also known as Banxico, lowered borrowing costs last month for the 10th consecutive time, with its key interest rate reaching its lowest level since 2022 at 7.5%.

Consumer prices rose 0.23% in September on a monthly basis, according to non-seasonally adjusted figures, slightly below market forecasts.

"The monthly increase was mainly due to the sharp seasonal rise in education prices, which recorded the largest monthly increase since 2008," Citi's Banamex said in a note.

Meanwhile, the closely watched core index, which strips out some volatile food and energy prices, increased 0.33%, compared with expectations of a 0.32% increase.

Sticky core inflation continues to be a concern that could shape future Banxico decisions, according to analysts, while policymakers also closely monitor ongoing global trade tensions and sluggish economic growth in the Latin American country.

(Reporting by Aida Pelaez-Fernandez and Ricardo Fieguroa; Editing by Paul Simao and Mark Porter)