UPDATE 2-Mexico inflation cools in September to eight-month low
* Mexico annual inflation cools for fifth month * Avocado prices pull down rate, despite storms * Data gives more room for rate cut By Alexandra Alper MEXICO CITY, Oct 9 (Reuters) - Mexican inflation eased in September for the fifth month in a row, despite flooding that spoiled crops and drove up fresh food prices, boosting bets for another widely expected interest rate cut. Inflation in the 12 months through September slowed to 3.39 percent from August's 3.46 percent rate, the national statistics agency said on Wednesday, marking its slowest pace since January. The figure was below expectations for a 3.48 percent rise, according to a Reuters poll. Avocado prices pulled down the headline rate, while tomato and gasoline prices rose, after twin storms last month killed at least 130 people and flooded large areas of farmland. The damage prompted the government to revise down its growth forecast for the year to 1.7 percent. Mexico's central bank is expected to cut its benchmark rate from a record low of 3.75 percent by another 25 basis points in October to help counter a slowdown in Latin America's No. 2 economy. It holds its next meeting on Oct.25. The bank, which targets an inflation rate of 3 percent, plus or minus one percentage point, unexpectedly lowered borrowing costs last month after growth contracted in the second quarter for the first time in four years. The International Monetary Fund slashed its 2013 growth outlook for Mexico on Tuesday to 1.2 percent after a weaker-than-expected first part of the year. Yields on short-term interest rate swaps edged down after the data, as investors boosted bets for another cut. Consumer prices rose 0.38 percent, below expectations for a 0.46 percent rise, and up from a 0.28 percent rise in August. Core prices, which strip out volatile energy and food prices, rose 0.32 percent, just below forecasts for a 0.35 percent increase and well above August's 0.09 percent rate.
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