UPDATE 1-Mexico 2010 inflation seen higher at 4.54 pct-poll

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Tue Nov 3, 2009 10:49am EST

(Adds detail from statement)

MEXICO CITY Nov 3 (Reuters) - Analysts' expectations for Mexican inflation next year rose sharply as lawmakers moved to approve a package of tax hikes, a central bank survey showed on Tuesday.

The monthly poll of economists and analysts said they expect inflation to rise to 4.54 percent in 2010 compared to a forecast of 4.28 percent in the prior month's poll.

Higher inflation expectations could put extra pressure on central bankers to raise interest rates because price forecasts can work their way into wage negotiations, fueling future inflation.

The bank cut rates for much of this year to fight a deep recession, but is now expected to increase borrowing costs within the next year as the economy recovers and a tax hike boosts the rate of inflation.

Analysts expect the economy to grow 2.9 percent in 2010, a slight increase from 2.8 percent in the September poll, and 3.2 percent in 2011.

Lawmakers over the weekend gave final approval to raise the value-added tax to 16 percent from 15 percent to reduce Mexico's dependence on waning oil revenues. (Reporting by Michael O'Boyle; Editing by James Dalgleish)

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