PREVIEW-Mexico early April consumer prices seen up 0.12 pct

WHAT: Mexico first-half April consumer price inflation

WHEN: Thursday, April 22 at 9:00 a.m. (1400 GMT)

REUTERS FORECAST: Median +0.12 percent early April headline
prices (MXCPIF=ECI: ) vs +0.46 pct in early March. Twenty
analysts participated in the survey and the range was between
-0.16 and +0.25 percent. Analysts see core prices (MXCPIH=ECI: )
up 0.18 percent.

FACTORS TO WATCH: Mexico’s annual inflation rate is
expected to stabilize in April as the one-off effects of tax
hikes at the start of the year diminish. The recent increase in
the value of the peso against the U.S. dollar is also curbing
the cost of imported goods.

Most investors expect the central bank to hold off on
interest rates increases until closer to the end of the year as
Mexico emerges from a deep recession. Last week, policymakers
said weakness in domestic sectors is partially offsetting an
export-driven recovery for manufacturers.

However the central bank has signaled that it will act
earlier if it sees evidence that price pressures from increases
in government-set utility and fuel rates and tax hikes start to
feed into overall inflationary expectations.

MARKET IMPACT: Higher-than-expected inflation could lead
investors to make bets in the interest rate swaps market that
the central bank will raise borrowing costs faster than
currently expected. The yield on Mexico’s 6-month IRS
(MXNIRS6M=RR: ), for example, could rise on such a bet.

Central bank website for inflation data:

All Mexico economic data (ECONALLMX: )

Today’s data (ECONMX: )

Investment Research

(Reporting by Lorena Segura; Writing by Robert Campbell;
Editing by Diane Craft)

PREVIEW-Mexico early April consumer prices seen up 0.12 pct