(Bloomberg) -- Mexico’s annual inflation shot past forecasts in the first half of April, likely cementing a rate hold at the central bank’s May monetary policy meeting.

Official data released Wednesday showed consumer prices rose 4.63% from a year before, above all estimates in a Bloomberg survey that had a 4.51% median forecast. Core inflation, which excludes volatile items like food and fuel, slowed to 4.39%.

Stubborn price pressures have made it more difficult for analysts to predict whether policymakers’ March interest rate reduction was the beginning of continuous easing. Strong hiring and heavy government spending ahead of June presidential elections are bolstering growth, but also causing concern that the Mexican economy may be running hotter than the central bank would like.

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Banxico, as the bank is known, lowered the key rate by quarter point last month to 11%, and has since cautioned that further cuts would be determined on a “step-by-step” basis. 

To many economists, Wednesday’s release confirmed a cautious stance is likely to come from Banxico. They believe a rate cut is now off the table for May — and potentially further on.

“The latest developments call into question whether it will cut at the bank’s subsequent meeting in June,” Kimberley Sperrfechter, an emerging markets economist at Capital Economics, wrote in research note.

Price increases of services, which central bankers are closely tracking, gained in the first two weeks of April and helped to keep annual inflation well above Banxico’s 3% goal.

Overall, prices were largely driven by a 1.68% advance in the cost of agricultural products compared to the prior two-week period, with staple goods like tomatoes showing some of the biggest jumps, the statistics agency said. 

Those big gains in non-core items give Banxico more reason to hold borrowing costs in May, according to Marco Oviedo, a strategist at XP Investimentos.

“It just another excuse for not to do it now,” he said.

Furthermore, economists say increased likelihood that the Federal Reserve holds off on lowering borrowing costs in the US makes it harder for emerging markets to deliver reductions of their own.

--With assistance from Giovanna Serafim and Robert Jameson.

(Recasts lead, add inflation details and analysis throughout)

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