UPDATE 1-Mexico to drop egg import tariffs as prices rise

* Local egg supplies drop as flu hits chicken flocks

* Egg prices more than doubled in some areas

MEXICO CITY Aug 22 (Reuters) - Mexico said on Wednesday it will drop tariffs on egg imports in an effort to halt steep price increases, which are hurting consumers' wallets and adding to inflation.

"This measure aims to stabilize the market...and reduce the price and guarantee the supply of this product," Economy Minister Bruno Ferrari said.

Newspaper headlines have proclaimed an "egg crisis" after prices more than doubled in some states in recent weeks due to an outbreak of avian flu in Jalisco, the state that produces more than half the 2.5 million tonnes of eggs consumed in Mexico every year.

Mexico normally does not import eggs but local supplies were reduced after more than 10 million chickens were slaughtered in a bid to stem the flu outbreak.

The country has already opened a tariff-free import quota for 221,000 tonnes of eggs for human consumption and another 24,400 tonnes for industrial use. The 45-percent duty was dropped on imports from such countries as China, Turkey and Ukraine.

Ferrari has said 17 pesos per kilo is a reasonable price for eggs. In some parts of the country -- including Mexico City -- prices are as high as 35-40 pesos ($2.70-$3.00), according to the economy ministry.

The egg spike comes on top of rising food prices worldwide, due largely to the severe drought in the United States, which has fanned fears of a repeat of the global crisis experienced in 2007 and 2008.

In Mexico, where tens of thousands of people protested in 2007 over price increases on tortillas, the corn-based food staple, rising fresh food prices have pushed inflation to a more than two-year high and above the central bank's 4 percent ceiling.

Eggs, although they have a low weight in the consumer price index, are commonly consumed and as such may feed into perceptions of rising inflation.