UPDATE 1-Mexico May inflation cools in sign of weak recovery

(Rewrites first paragraph, adds analyst comment)

MEXICO CITY, June 9 (BestGrowthStock) – Inflation cooled in Mexico
during May in the latest sign the country’s weak economic
recovery could allow the central bank to leave interest rates
low into next year.

Consumer prices fell 0.63 percent during the month, a
slightly bigger drop than expected. That pushed the annual
inflation rate lower to 3.92, the lowest level since December.

“The market is betting that the central bank will not raise
interest rates this year and this data confirms that
expectation,” said Scotiabank economist Mario Correa.

Prices fell for electricity and fresh vegetables like
onions and tomatoes.

Mexico’s economy is limping back from a severe recession
and the central bank expects it will underperform until at
least early next year.

The yield on Mexico’s 6-month interest rate swap
(MXNIRS6M=RR: ) edged down a half basis point to 4.9741 percent,
suggesting some investors might have slightly trimmed bets on a
rate hike by year end.

Analysts polled by Reuters had expected prices would fall
0.58 percent. Annual inflation was 4.27 percent in April.

The closely watched core index, which strips out some
volatile food and energy prices, rose 0.24 percent during the
month (MXCPIX=ECI: ), which was slightly lower than expected.

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(Reporting by Jason Lange)

UPDATE 1-Mexico May inflation cools in sign of weak recovery