UPDATE 2-Mexico inflation speeds up, pressures central bank

* Consumer prices up 5.06 pct in year through March 15

* Pressure building on central bank to raise rates

* Core inflation seen as tame
(Adds analyst’s comment, exports data, byline)

By Jason Lange

MEXICO CITY, March 24 (BestGrowthStock) – Mexico’s annual inflation
rate accelerated more than expected in early March to its
fastest pace in seven months, raising pressure on the central
bank to increase borrowing costs.

Mexican consumer prices increased 5.06 percent in the year
through March 15, the highest such reading since August, after
prices rose 0.46 percent in the first half of March
(MXCPIF=ECI: ), the central bank said on Wednesday.

Higher prices for some vegetables, as well as for plane
tickets and gasoline, pushed inflation higher early in the
month. Many analysts expect the central bank will raise
interest rates in the coming months.

Mexico is recovering from its deepest recession since the
1930s. While growth is expected to remain weak this year, the
bank said this month the recovery is starting to fuel
inflation.

Exports jumped 31 percent in February from a year earlier,
the national statistics agency said in a separate report.

Mexico’s inflation has been rising since January after the
government hiked taxes and state-set energy prices. Analysts
polled by Reuters had expected prices to rise 0.34 percent in
early March.

However, analysts noted that core prices in early March
rose less than expected during the period.

The closely watched core consumer price index (MXCPIH=ECI: ),
which strips out some volatile food and energy prices, rose
0.18 percent during the first two weeks of the month. Analysts
has expected an increase of 0.23 percent.

Headline prices had risen 0.18 percent in the first half of
February, while core prices rose 0.17 percent.

Mexican interest rate swaps (MXNIRS2=: ) were little changed
following the inflation report, indicating investors had not
made substantial changes to their bets on the timing of rate
hikes.

“I don’t expect a hawkish action by the central bank
precisely because inflation pressures are coming from the
non-core component,” said RBS economist Benito Berber.

In a separate report, the national statistics agency said
Mexico posted a $244 million trade surplus (MXTBAL=ECI: ) in
February. Analysts polled by Reuters had expected a $100
million deficit.

Stock Market Research

(Additional reporting by Michael O’Boyle; Editing by James
Dalgleish)

UPDATE 2-Mexico inflation speeds up, pressures central bank