October 7, 2016 / 1:50 PM / 3 years ago

UPDATE 2-Mexico annual inflation nears 3 pct target rate in September

(Updates with historic data and analyst comment)
    MEXICO CITY, Oct 7 (Reuters) - Mexico's annual inflation
accelerated in September to nearly the central bank's 3 percent
target level, just days after its governor warned there could be
higher interest rates if inflation "takes off" beyond that goal.
    Consumer prices rose 2.97 percent in the year
through September, the national statistics agency said on
Friday, above a 2.91 percent forecast from a Reuters poll. It is
the steepest annual price rise since April 2015.
    The biggest driver of inflation was volatile agricultural
    The central bank hiked interest rates in late September to
stem risks that a weak peso could fan inflation. The peso has
been battered this year against the U.S. dollar, in part because
of fears that Republican nominee Donald Trump could win the Nov.
8 U.S. presidential election. 
    On Tuesday, Central Bank Governor Agustin Carstens said that
it was important annual inflation did not "take off" beyond 3
percent or that could imply higher interest rates.
    The core price index, which strips out some
volatile food and energy prices, rose at an annual rate of 3.07
    Goldman Sachs economist Alberto Ramos said that core goods
inflation, which rose at an annual rate of 3.92 percent,
reflected the depreciation of the peso.
    "This is a sign of pass-through pressures from currency
weakness, which may be intensifying at the margin," Ramos said
in a note to investors.    
    The peso has fallen more than 11 percent this year
against the dollar.
    The bank targets inflation of 3 percent with a one
percentage point tolerance zone on either side.
    During the month of September, consumer prices 
rose 0.61 percent. 
    The core index rose 0.48 percent in that month.

 (Reporting by Luis Rojas and Miguel Gutierrez; Writing by
Christine Murray; Editing by Simon Gardner and W Simon)
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