(Bloomberg) -- Mexico’s annual inflation accelerated more than expected in March to its highest level in over two decades led by fuel prices, putting additional pressure on the central bank to continue boosting interest rates.

Consumer prices rose 7.45% from the same month a year earlier, above the 7.38% median estimate of economists surveyed by Bloomberg, the national statistics institute reported Thursday. On a monthly basis, prices rose 0.99%, more than all the estimates by economists, who had a 0.92% forecast.

Core inflation, which excludes volatile items like fuel, rose 6.78% last month from a year earlier, also above the median estimate of analysts and its fastest pace since April 2001. Sustained core price increases have particularly worried policy makers as a sign that elevated inflation in Mexico could be more persistent than previously predicted.

Mexico’s central bank has raised interest rates by 50 basis points in each of its last three meetings, and it is expected to continue increasing borrowing costs in order to tame inflation expectations. Last month, for the first time since its tightening cycle started in June, its members voted unanimously to raise the key rate to 6.5%.

Banxico, as the central bank is known, says inflation would peak in the first quarter, then slow to 5.5% by the year’s end. Yet economists have a more pessimistic view, with analysts surveyed by Citigroup Inc.’s local unit raising their 2022 inflation forecast to almost 6% this week from 5.7% two weeks earlier.

The central bank targets inflation at 3%, plus or minus one percentage point.

Accelerating inflation is becoming a political headache for the government of President Andres Manuel Lopez Obrador, who recently said he had a plan in place specifically to rein in food costs and who didn’t rule out implementing price controls.  

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Mexico has used its profits from the higher crude exports to subsidize domestic fuel prices and the Finance Secretary estimates that it can keep a balanced budget even if oil prices spike to $155 per barrel. Since the campaign that took him to the presidency in 2018, Lopez Obrador has pledged to Mexican drivers not to allow gasoline price increases above the general inflation level.

In March, prices of cooking gas and gasoline led the inflation gains, according to the statistics institute report.

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