UPDATE 3-Mexico retailers cut prices to fight inflation

(Adds detail on tortilla prices)

By Cyntia Barrera Diaz

MEXICO CITY, Jan 10 (Reuters) - Mexico's leading retailers agreed to cut prices on 300 household goods, ranging from eggs to shampoo, from Thursday through the end of March as part of a government-backed plan to fight inflation.

Powdered milk, beans, pasta, and soap are also on a broad list of products that will come down in price, said Vicente Yanez, head of the retail association ANTAD.

"Inflation in Mexico has cost us dearly," he told the Televisa network.

Retailers will also freeze the price of tortillas, a staple of the Mexican diet, Economy Minister Eduardo Sojo told reporters.

Mexican inflation came in at 3.76 percent in 2007, within the central bank's target range and one of the lowest rates in recent years. But global demand for food commodities and increased amounts of grains being diverted for use in biofuels are expected to push prices higher this year.

Last year, retailers also agreed to temporarily freeze tortilla prices after they jumped 25 percent, driven by higher U.S. demand for corn-based ethanol.

Mexico's central bank said in its most recent quarterly report that inflation would hover above 4 percent for most of this year before falling toward its 3 percent goal by the end of 2009.