Annual inflation rose to 6% in September, the national statistics agency INEGI reported Thursday, a figure that is double the central bank’s target.

It was the seventh consecutive month that annual inflation exceeded the Bank of Mexico’s target of 3% give or take a percentage point, and the highest rate since April, when inflation reached 6.08%.

INEGI said the National Consumer Prices Index rose 0.62% over its August level, a jump almost triple the size of the increase in September last year. The increase ended a four-month streak of decreases to the annual inflation rate.

Among the drivers of inflation in September were LP gas – despite government price controls – as well as tomatoes and onions.

LP gas prices rose 4.7% compared to August while consumers paid 13% more for tomatoes and 27% more for onions.

Alejandro Saldaña, an economist at the financial company Ve Por Más, said the recent spike in coronavirus infections affected global supply chains, causing prices to go up. He warned of a possible energy crisis at the end of the year due to low oil and gas inventories and higher demand for those fuels in winter.

“… In an extreme case the shortage of energy sources will lead to new bottlenecks, greater shortages [generally] and as a result increases in prices for goods and services,” Saldaña said.

Gabriela Siller, director of economic and financial analysis at Banco BASE, said there is a risk of stagflation, a situation in which inflation and unemployment are high and economic growth slows.

“In the 1970s, stagflation was caused by [high] oil prices due to a lack of supply. It could occur now due to the shortage of energy sources, interruptions in supply chains and high transport costs,” she said.

Marcos Daniel Arias, an analyst at Monex, said the  financial group had revised its end-of-year inflation forecast to 6.5%, up from a previous prediction of 6.05%, while the Bank of México is forecasting that inflation will not return to its target range until 2023.

With inflation currently high, most analysts believe the central bank will once again raise interest rates the next time its board meets. The bank’s benchmark rate is currently 4.75% after a 0.25% hike last week.

The announcement of the September inflation rate on Thursday put additional pressure on the peso, which lost ground for a fourth consecutive day. According to central bank data, the peso depreciated 0.41% on Thursday to 20.66 pesos to the US dollar.

With reports from El Economista and El Financiero