April 24, 2014 / 1:31 PM / in 4 years

UPDATE 1-Mexico annual inflation cools further in early April

(Recasts with annual inflation rate)

MEXICO CITY, April 24 (Reuters) - Mexican annual inflation eased a bit more than expected in early April, backing expectations that policymakers will leave interest rates on hold this year to support an economic recovery.

Inflation for the 12 months through the first half of April cooled to 3.53 percent, its lowest since early November, the national statistics agency said on Thursday.

That was below a forecast of 3.55 percent in a Reuters poll and down from a 3.76 percent rate for the full month of March.

Mexico’s central bank is expected to hold its main interest rate steady on Friday at a record low of 3.5 percent and policymakers are seen maintaining steady borrowing costs until next year to support growth after a slowdown in 2013.

Consumer prices fell 0.19 percent in the first half of April, due mostly to summer electricity subsidies, compared to expectations for a 0.16 percent drop.

Core consumer prices, which exclude some volatile food and energy prices, rose 0.26 percent compared to estimates for a rise of 0.09 percent.

Early this year, a jump in consumer prices, due mostly to new taxes on soft drinks and junk food, pushed inflation above the central bank’s 4 percent limit, but the pace of price gains has eased since then. (Reporting by Michael O‘Boyle Editing by W Simon)

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