* Annual inflation slows to 4.36 pct vs estimated 4.31 pct
* Analysts see drop as calming central bank inflation
* Jump in 1st half November inflation driven by power rates
By Alexandra Alper and Krista Hughes
MEXICO CITY, Nov 22 Mexico's annual inflation
rate eased again in early November, fueling hopes that price
increases have peaked in Latin America's second-biggest economy
and underscoring expectations for interest rates to remain on
Inflation in the 12-month period to mid-November slowed to
4.36 percent, a touch above the 4.31 percent median
forecast in a Reuters poll of economists, the national
statistics agency said on Thursday.
The fall backs the central bank's view that inflation peaked
in September at a 2-1/2 year high of 4.77 percent and bolsters
expectations for interest rates to remain on hold at the next
central bank meeting on Nov. 30 and through next year.
Inflation had been driven higher by fresh food prices but
these fell in the first two weeks of November, although a
removal of summer electricity subsidies - customary in Mexico
with the approach of winter - kept price gains high.
In the first half of November, consumer prices
overall rose 0.79 percent, above the 0.72 percent rise forecast
in the poll, and nearly double the increase a month earlier.
But Banorte-Ixe economist Gabriel Casillas said a 7 percent
rise in electricity prices accounted for 80 percent of the gain
and expected annual inflation to end the year at 4.2 percent,
approaching the central bank's 4 percent ceiling.
The Banco de Mexico, which has kept interest rates on hold
at 4.5 percent since mid-2009, warned on Nov. 7 it could hike
rates soon if inflation failed to decline but investors do not
expect it to change course until early 2014.
"The central bank has been very clear that as long as the
trend to the downside continues they will remain vigilant but
rates will remain on hold," said Bank of America-Merrill Lynch
economist Carlos Capistran.
"It's only if that trend disappears, if annual inflation
starts to pick up again, we have to worry about a possible hike
... I'm not expecting any movement from the central bank."
The closely watched core price index, which
strips out some volatile food and energy prices, climbed 0.18
percent in the first half of the month, compared with analysts'
expectations for a 0.21 percent rise.
Fresh food prices fell 0.33 percent and services prices, a
key gauge of home-grown price pressures, were almost flat.
Although non-food core goods inflation, which is the most
sensitive to currency fluctuations, picked up slightly in the
month, analysts said this was likely due to one-off price hikes
leading up to nationwide sales last weekend.
The peso has gained more than 7 percent against the dollar
so far this year, one of the biggest advances against the
greenback among 152 currencies tracked by Reuters, and this
should help limit inflation going forward by capping imported