UPDATE 2-Mexico June retail sales down 0.77 pct from May

* Mexico June retail sales fell 0.77 pct from May

* Setback to recovery give central bank room

* Retail sales rise 1.5 pct from year earlier
(Rewrites throughout, adds quote from consumer)

MEXICO CITY, Aug 23 (BestGrowthStock) – Mexican retail sales fell
in June, dealing a setback to the country’s recovery from
recession and keeping pressure off the central bank to raise
borrowing costs soon.

Retail sales fell 0.77 percent during the month from May
(MXRTSL=ECI: ), the national statistics agency said on Monday.

Mexico posted one of the worst economic contractions in the
world in 2009, and a cooling U.S. economy in 2010 is hitting
growth in Mexican exports.

Retail sales were 1.5 percent higher in June compared to
the same month in 2009 (MXRSLY=ECI: ), which shows spending is
still better than it was last year. At the same time, the data
was well below analysts’ forecasts (ECONMX: ).

Mexico is relying on strong exports to the United States to
help it emerge from recession. Weakness in Mexican exports
eventually works its way into the wider economy, hitting the
broader service sector.

The nation is also bracing for the impact of a drug war
that is scaring away some foreign tourists.

“We live with the fear that we could lose our jobs,” said
Pilar Gutierrez, who works at a Mexico City hotel and was
shopping at a department store.

While Brazil, Chile and Peru have hiked interest rates this
year to cool stronger economic recoveries, most economists
think Mexico will keep rates on hold until at least mid-2011.
(Reporting by Patrick Rucker and Caroline Stauffer; Editing by
Paul Simao)

UPDATE 2-Mexico June retail sales down 0.77 pct from May