April 24, 2017 / 1:40 PM / 4 months ago

Mexico inflation rises to nearly 8-year high in early April

MEXICO CITY (Reuters) - Mexican annual inflation rose more than expected in early April to hit its fastest pace in nearly 8 years, which could bode for further interest rate hikes from the central bank.

Inflation for the year through mid-April was 5.62 percent MXCPHI=ECI, the national statistics institute said on Monday.

The figure was the highest since June 2009, and above expectations of economists polled by Reuters for 5.58 percent.

Mexico's central bank governor Agustin Carstens last week signaled on that the bank's cycle of monetary tightening might not be over.

The Banco de Mexico has raised the benchmark interest rate to 6.50 percent, its highest since 2009, with a string of 50-basis point hikes followed by a smaller increase, 25 points, in its last board meeting in late March.

The core price index MXCPIC=ECI, which strips out some volatile food and energy prices, rose 4.76 percent in the 12-month period to mid-April, above the 4.61 percent forecast in a Reuters poll. The rate is at its highest since August 2009.

A deep slump in the peso last year has pressured inflation, but a recent rally in the currency could help contain pressures.

In the first half of April, consumer prices fell 0.15 percent MXCPIF=ECI as summer electricity subsidies kicked in, while the core price index MXCPIH=ECI climbed 0.26 percent.

A separate report from the statistics institute showed the pace of economic growth in February slipped to its slowest since last August.

Reporting by Michael O'Boyle; Editing by Meredith Mazzilli

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