Prices in Mexico continue to climb: monthly inflation registered its highest increase in October in 23 years, the federal statistics agency Inegi said on Tuesday.

Prices rose 0.84% ​​in October compared to September; a jump second only to October 1998 when a monthly increase of 1.43% was registered. 

The rate of inflation stands at 6.24%, the highest annual rate since December 2017, when it reached 6.77%.

The rise has been driven by higher prices for LP gas, which escalated in February due to a supply shortage caused by weather in Texas. And electricity prices rose 18.8% after a seasonal subsidy ended, the newspaper El País reported. 

Eggs, onions, green tomatoes and air travel also became more costly. 

Inflation in the United States is also sky high: it’s at its highest level since 1990, which inevitably has a knock-on effect for the Mexican economy, due to the two countries’ intimate trading relationship. U.S. inflation jumped from 5.4% in September to 6.2% in November, yet the Federal Reserve played down concerns, calling the rise “transitory.” 

In Mexico, private sector specialists raised their inflation expectations for 2021 to 6.6%, which makes 10 consecutive months of upward adjustments. The Bank of México will meet again on Thursday to evaluate its inflation targets and monetary policy.

Deputy governor Jonathan Heath said the current inflationary phenomenon was complex and warned that the energy reforms proposed by President López Obrador could inhibit the country’s economic recovery. 

However, an economist at consultancy Oxford Economics, Joan Domene, said prices could soon fall. “We will wait for the effect of the Buen Fin [shopping promotion] in November to generate a drop in prices. The recent rise in inflation and volatility of the peso could force Banxico to hike [interest rates] more aggressively,” he said. 

The Mexican economy has experienced an economic rebound since the COVID-19 pandemic. Since an 8.5% fall in 2020, the government expects growth rates of 6-6.5% in 2021.

With reports from El País, El Financiero and BBC