UPDATE 2-Mexico Nov annual inflation rate rises to 4.32 pct

* Mexico annual inflation rate accelerates

* Reading keeps pressure on central bank
(Adds analyst’s comment, market reaction)

By Jason Lange and Noe Torres

MEXICO CITY, Dec 9 (BestGrowthStock) – Mexico’s annual inflation
rate accelerated in November due to higher prices for
electricity and fresh fruits and vegetables, keeping pressure
on the central bank to eventually raise interest rates.

Consumer prices rose 4.32 percent in the year through
November (MXCPIA=ECI: ), up from the 4.02 percent rate clocked in
October and in line with expectations, data from the central
bank showed on Thursday.

Mexico is still smarting from a deep recession and economic
output has yet to recover to its peak level seen in early 2008.
But inflation is nonetheless accelerating, largely because of
food and energy prices.

The central bank has warned that high international grain
prices could pressure inflation down the road. Most economists
expect the bank to raise interest rates in early 2012.

“(The inflation data) is rather in line with what we were
expecting so it doesn’t change my outlook,” said Ixe economist
Luis Flores.

The central bank says it can tolerate inflation as high as
4 percent. Policymakers have been predicting that the annual
inflation rate would accelerate in late 2010 because of
seasonal factors, but that inflation should trend lower in
2011.

Mexico’s economy is expected to grow about 5 percent this
year after contracting 6.1 percent in 2009. The growth rate is
seen slowing sharply in 2011 to 3.5 percent, according to a
recent poll of analysts conducted by the central bank.

The yield on Mexico’s one-year TIIE interest rate swap
contract (MXNIRS1Y=RR: ), which investors use to make bets on the
direction of monetary policy, was about flat from levels
registered before the data’s release.

Analysts polled by Reuters had forecast the inflation rate
would rise to 4.34 percent.

Consumer prices (MXINFL=ECI: ) rose 0.80 percent in November.
Analysts had expected an increase of 0.82 percent.

The core index, which strips out some volatile food and
energy prices, rose 0.25 percent during the month (MXCPIX=ECI: ),
also in line with expectations.
(Additional reporting by Michael O’Boyle; Editing by Andrew
Hay)

UPDATE 2-Mexico Nov annual inflation rate rises to 4.32 pct