Mexican inflation seen at 21-1/2-year high in August

MEXICO CITY, Sept 5 (Reuters) - Mexican inflation is forecast to have accelerated in August to its highest level in over 21-1/2 years, a Reuters poll showed on Monday, boosting bets the Bank of Mexico will continue hiking its key interest rate through the rest of the year.

The median forecast of 16 analysts projected annual inflation at 8.67% in August, a level not seen since December 2000.

“Consumer prices continued to be pressured in August ... sending the signal additional tightening is required for inflation,” said Alfredo Coutino, head of Latin America economic research at Moody’s Analytics.

Mexican national statistics agency INEGI will publish August inflation data on Thursday.

Food prices, including processed and agricultural products, are seen as the main drivers of inflation, said analyst Rafael Camarena at Banco Santander.

Banxico, as the Bank of Mexico is known, targets inflation of 3% plus or minus one percentage point and has raised its benchmark interest rate by 450 basis points over its last 10 monetary policy meetings to 8.5%.

The Mexican central bank raised rates by 75 basis points in August, mirroring the U.S. Federal Reserve.

The key rate “may need to go a little further in the restrictive zone” to control inflation, Banxico board member Gerardo Esquivel said in an interview last week.

Banxico has projected that annual headline inflation will peak during the third quarter at 8.5%.

“We expected to see the inflationary peak in the third quarter, but there is still little evidence to say that it is going to happen. It is not clear when it will arrive or the pace at which inflation will slow down,” said analyst Adrian Muñiz of Vector.

Annual core inflation, which strips out some volatile food and energy prices, is forecast to reach 8.04%, also the highest since late 2000, according to the poll.

In August alone, headline inflation is forecast to have risen 0.66%, according to the Reuters survey, while the median projection for monthly core inflation is 0.78% . (Reporting by Valentine Hilaire; Additional reporting by Gabriel Burin in Buenos Aires; Editing by Anthony Esposito and Leslie Adler)