Jackie Botts and Gabriel Araujo

MEXICO CITY, (Reuters) – Inflation in Mexico rose more than anticipated in May according to data released by the INEGI national statistical agency on Thursday. This led to bets that the Bank of Mexico would continue raising interest rates to counter spiraling consumer costs.

The inflation rate rose by 7.65% during the twelve months to May. This is a little lower than the 7.68% recorded in April 21 years ago.

The consumer price index increased by 0.8% from one month before in May. Core inflation, which excludes volatile energy and food prices, increased 0.59% in May, according to closely-watched data. Annual core inflation was at 7.28%.

Reuters polled economic experts and they predicted annual headline inflation to be 7.62% with annual core inflation at 7.24%.

Banxico is the name of the central bank. It has an inflation target at 3%, plus or minus 1 percentage point, and it has raised its benchmark rate by 300 basis points from mid-2021 up to 7%.

Mexico’s finance ministry claimed recently that the figures prove inflation is “controlled”, thanks in part to subsidies for fuel and a newly implemented anti-inflation strategy.

With the objective of maintaining fair prices in a variety of staple foods, this plan will allow for increased production of corn, beans and rice.

Jonathan Heath, Banxico’s deputy governor, stated on Twitter (NYSE : ) that the most concerning thing about the data is “the inflation for food products”, which has reached its highest point since 1999.

Banxico indicated last week it would be willing to go further on monetary policy to lower inflation. In fact, Banxico could increase its rate by 75 basis points during the next meeting.

Alberto Ramos, economist at Goldman Sachs (NYSE) said that overall, May’s core inflation print was high, disseminated prices pressures and deteriorating inflation expectations. Federal Open Market Committee signaling would support a 75-basis points rate increase” at the bank’s June 23rd meeting.

Nikhil Singani of Capital Economics is one of those analysts who believes Banxico would offer another 50 basis points rate rise to 7.50%.

Mexico’s numbers came at a time when Brazilian inflation was lower than expected in May. The central bank of Latin America’s biggest economy aggressively increases rates.

Analysts predicted that the monetary policy tightening cycle will continue, despite Brazil’s inflation rate remaining at double-digits (11.73%).

David Beker from Bank of America Merrill Lynch, (NYSE: Brazil) forecasted “a last increase” of 50 base points in June. That would raise the Selic by 13.25%.