UPDATE 1-Mexico consumer prices fall in early April

(Adds market reaction, analyst quote and retail sales data)

MEXICO CITY, April 22 (BestGrowthStock) – Mexican consumer prices
unexpectedly fell in the first half of April, taking pressure
off the central bank to raise interest rates, data showed on
Thursday.

Mexican prices fell 0.31 percent during the first two weeks
of the month (MXCPIF=ECI: ), pushing the country’s 12-month
inflation rate to 4.41 percent, the central bank said.

Prices fell for electricity, packaged tours and airline
tickets.

Mexico’s central bank is expected to raise interest rates
later this year to contain inflation, which accelerated early
this year mostly due to higher taxes and fuel prices set by the
government.

“This shows that the central bank has plenty of space to
leave rates as they are for some time,” said Luis Flores, an
economist at brokerage IXE in Mexico City.

Investors reacted by cutting bets on the likelihood of
interest rate hikes.

The yield on Mexico’s interest rate future contract due in
October (TIIV0: ) fell 4 basis points to 5.26 percent, while the
yield for Mexico’s 20-year government peso bond (MX20YT=RR: )
dropped sharply, down 9 basis points to bid 7.8 percent.

Analysts in a Reuters poll on average were expecting an
increase of 0.12 percent in Mexican consumer prices during
early April.

The closely-watched core consumer price index (MXCPIH=ECI: ),
which strips out some volatile food and energy prices, dropped
0.03 percent during the first two weeks of the month.

Headline prices had risen 0.46 percent in the first half of
March, while core prices rose 0.18 percent.

In a separate report, Mexican retail sales rose 2.3 percent
in February compared with the same month a year earlier, the
national statistics agency said. Analysts surveyed by Reuters
had expected sales to rise 1.5 percent.

Investment Basics

(Reporting by Jason Lange and Michael O’Boyle)

UPDATE 1-Mexico consumer prices fall in early April