LATAM WEEKAHEAD-Eyes on Mexico's election, inflation data

By Walter Brandimarte

NEW YORK, July 5 (Reuters) - Latin American investors will start the week digesting the results of Mexico's congressional elections, which are expected to complicate President Felipe Calderon's push for much needed oil and tax reforms.

The markets' focus will later turn to a series of key reports on consumer prices in Brazil and Mexico that will likely show inflation remains well behaved in the two largest Latin American economies.

Polls show Calderon's conservative National Action Party, or PAN, will lose the lower house elections by some 5 percentage points to the Institutional Revolutionary Party, or PRI, which has flourished in opposition as the economic slump hurt the president's popularity.

Without enough support to pass the reforms, Calderon will probably see Mexico's credit ratings downgraded later this year.

"Although widely expected, given the latest polls, we look for the Mexican peso and credit to trade with a weaker bias on confirmation of a split Congress," RBC Capital Markets said, adding that such a result would "lower the odds of meaningful, productivity-enhancing reforms being passed."

Later in the week, however, key consumer inflation numbers in Brazil and Mexico are likely to take center stage.

Brazil's benchmark IPCA price index for June, due on Wednesday morning, is expected to rise about 0.3 percent, below the 0.48 percent rise in the previous month.

The slowdown in Brazil's headline inflation will likely come from "the waning effects of the medicine and tobacco price increases and administered prices adjustment," Barclays Capital said.