Inflation is at its highest level in more than 20 years, a report from the federal statistics agency INEGI shows. 

Data for the first half of November revealed the inflation rate was 7.05%, up 0.69% since the end of October. That figure is worlds away from the Bank of México’s target of 3%, plus or minus one percentage point. 

The rate has continuously surpassed Banxico’s target since March, and is at its highest level since April 2001 when it hit 7.08%.

The figure exceeded the expectations of experts consulted in a Reuters poll, who had anticipated a rate of 6.84%. 

The hike was driven by increases in electricity rates and the cost of some agricultural products.

A high rate of inflation is expected to continue into 2022. Banxico Deputy Governor Jonathan Heath said inflation was a matter of urgency. “Now our year-end estimate for December is between 7.1% and 7.3%; it really is a very serious problem. It means without a doubt that we are facing the problem of the highest inflation in the last 20 years,” he said.

President López Obrador said it was a global problem. “It is a worldwide phenomenon, there is a crisis that is now a post-pandemic crisis and is manifesting itself in all countries. We have inflation equal to that of the United States … [which is] more than 6%, Brazil has inflation of 11%,” he said.

He added that his landmark electricity reform was necessary to help manage inflation. “Fortunately, we are managing to stabilize prices. That is why we need the electrical reform, so that the price of electricity does not increase,” he said. 

An economist at Capital Economics, Nikhil Sanghani, said he expected Banxico to continue its moderate approach. “The strength of this inflation data will put pressure on Banxico to act more aggressively to quell inflation. But for now, we believe its tightening cycle will continue to be gradual,” he said.

Banxico raised its benchmark interest rate by 0.25% this month for the fourth time in a row, setting it at 5%, and raised its expectations for inflation for the end of this year.

Its next monetary policy announcement, the eighth and last of the year, is scheduled for December 16.

With reports from El Economista and Excélsior