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The monthly reading mirrored the figures from January, albeit with a shift in composition: in February, core inflation and regulated prices served as the primary drivers, while seasonal prices acted as a ceiling against further acceleration. Consequently, we have revised our 2026 inflation projection upward to 24%.

We upgraded our 2026 GDP growth forecast to 1.8% (1.2% previously), supported by the sustained resilience of consumption and the anticipated gradual recovery in investment. After a weak 2025, formal employment begins to improve. We expect core inflation to resume its downward trend in the second quarter of the year.

Over the past year, the global economy has once again shown that stability is always provisional. The economic policy measures of the U.S. administration, together with persistent geopolitical tensions, have substantially increased economic uncertainty.

Consumer prices rose by 2.96% m/m in February, bringing annual inflation to 31.5% and marking a pause in disinflation. The recent energy price shock and persistent price pressures create upside risks to our 25% year-end forecast, though higher real rates and a potential fuel pricing mechanism could help limit these risks.

Treasury yields declined following a softer-than-expected January headline CPI reading, which continued to indicate limited tariff pass-through. However, the inflation report also signaled that disinflation momentum in cyclical components has somewhat slowed.

Food prices drove headline inflation for the month, while seasonal components hit a 10-month high. Increased forward-looking inertia has prompted us to revise our 2026 projection from 20% to 22%.

We believe it will still have scope to resume gradual rate cuts later this year, as both weak domestic demand and the continued strength of the peso should help contain inflationary pressures going forward.