UPDATE 3-Mexico's Ortiz says food inflation still looms

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By Robin Emmott and Gabriela Lopez

MONTERREY, Mexico, May 20 (Reuters) - Mexico's central bank chief warned on Tuesday that a surge in grain prices would continue to drive a spike in inflation, but he said this has yet to have an effect on how companies set prices in general.

"There are still inflation pressures, as we say, in the pipeline," central bank Gov. Guillermo Ortiz told businessmen in the northern industrial city of Monterrey.

But at the same time, Ortiz noted that Mexico's current food-driven spike in inflation appeared to be contained.

"It has not spread," Ortiz said later at another business conference in the same city. He added that grain prices appeared to be stabilizing.

Inflation has jumped across Latin America in recent months as rapidly developing economies like India and China boost demand for food commodities and as grains are diverted to make biofuels. Mexican consumer prices rose 4.55 percent in the 12 months through April, the quickest pace in three years.

Ortiz's comments are important to investors who are trying to gauge whether policy makers will raise borrowing costs. Some central bank watchers see rising prices for staple foods like corn tortillas making a rate hike likely later this year.

Tortilla producers predicted last week that prices for the staple food would rise sharply in coming months, rattling bond investors who thought that could force a rate hike.