By Anthony Harrup 

MEXICO CITY -- Mexico's inflation accelerated in November to its fastest pace in two years, affected by higher food prices and the impact of a weaker currency on the cost of imported goods.

The consumer price index rose 0.78% last month, pushing the annual inflation rate up to 3.31% from 3.06% at the end of October, the National Statistics Institute said Thursday.

Core CPI -- which excludes energy and fresh fruit and vegetables -- rose 0.22% in November and was up 3.29% in the preceding 12 months.

The November increases were below the median estimates of 0.82% and 0.3%, respectively in a Wall Street Journal survey of economists.

Electricity rates contributed the most to November's inflation as summertime subsidies ended in northern cities, although overall energy costs have risen just 1.77% in the past year. Food prices, however, were up more than 5% from November 2015, as were health costs.

The depreciation of the Mexican peso against the U.S. dollar, which raises the price of imported goods, has also affected inflation. Core goods prices, those most affected by the currency, were up an annual 3.91% in November.

The inflation risk from the weaker peso prompted the Bank of Mexico to raise interest rates four times this year, bringing the overnight lending rate target to 5.25% from 3.25% at the end of 2015.

"The sharp peso depreciation during the last 12 months and very accommodative domestic financial conditions added upside risk to the inflation outlook in spite of the loss of growth momentum," Goldman Sachs Latin America economist Alberto Ramos said in a note. "This backdrop fully justifies the central bank decision to continue to push rates higher."

All 24 banks polled this week by Citibanamex expect the central bank to raise the rate again next week following the monetary policy decision by the U.S. Federal Reserve, which is also widely expected to increase borrowing costs. Expectations are divided between a quarter-point and half-point increase in Mexico.

Prospects of a continued peso impact on prices, and expectations of higher gasoline prices next year have led economists to raise their average inflation forecasts for 2017 to around 4% -- the top of the central bank's 2%-4% comfort zone -- with many expecting it will go higher than that.

The Bank of Mexico expects inflation to be above 3% all next year, while holding within the target range.

Write to Anthony Harrup at anthony.harrup@wsj.com

(END) Dow Jones Newswires

December 08, 2016 10:17 ET (15:17 GMT)

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