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(Bloomberg) -- Brazil’s inflation picked up much more than expected in early November, adding urgency to government plans to cut swelling public spending that is pushing cost-of-living increases above target.

Official data released Tuesday showed consumer prices rose 4.77% from a year earlier, above all forecasts in a Bloomberg survey of economists that had a 4.64% median estimate. On the month, they increased 0.62%.

Price pressures are building in Latin America’s largest economy, stoked by a historic drought and investor anxiety over growing government spending. The central bank has been hiking interest rates since September to pull the annual inflation rate back down to its 3% goal — and warned it will continue to do so if the outlook does not improve.

So far, a hot job market and strong consumer demand have dulled the effects of double-digit borrowing costs. At the same time, food and energy have been further impacted by Brazil’s worst-ever drought that’s withered crops and caused regulators to increase utility prices.

Food and beverage prices jumped 1.34% on the month, representing the biggest driver of inflation in the first half of November. Nearly all of the groups of good services tracked by the statistics agency became more expensive in the period, with only education costs cooling 0.01%.

The price of airfare, a perennial source of frustration for Brazilians, shot up nearly 23% as the holiday travel season approaches.

‘Continuous Deterioration’

Economists were divided over the implications of Tuesday’s data. Some interpreted the acceleration in prices as a one-off caused by airline ticket costs, while others saw it as a sign that the central bank’s board of directors, known as Copom, may be soon required to adopt more aggressive rate hikes.

“The continuous deterioration of short- and medium-term inflation expectations, and still strong growth momentum increase the probability that the Copom may have to accelerate the pace of rate hikes again, to 75 basis points,” Alberto Ramos, chief Latin America economist at Goldman Sachs & Co. LLC, wrote in a note.

The outlook is clouded by a deterioration in Brazil’s assets, with the real standing as one the worst emerging-market currencies this year. A weaker exchange rate pressures the cost of living by making imports more expensive.

Investors are anxiously waiting for President Luiz Inacio Lula da Silva to unveil his plans to curb government outlays, which they describe as increasingly unsustainable. An announcement is expected as soon as this week.

The risks “are firmly skewed to the upside, especially if the ‘spending review’ fails to soothe fears that President Lula is not taking fiscal discipline seriously,” Jason Tuvey, Deputy Chief Emerging Markets Economist at Capital Economics, wrote in a research note.