UPDATE 1-Mexican inflation quickens more than expected in early April

(Updates with details, background)

MEXICO CITY, April 24 (Reuters) - Mexican consumer price inflation accelerated faster than expected in the first two weeks of April, official data showed on Wednesday, restricting the central bank’s scope to ease borrowing costs in the coming months.

Consumer prices rose by 4.38 percent in the year through early April, according to figures published by national statistics agency INEGI. That overshot the forecast for a reading of 4.22 percent in a Reuters poll of analysts.

Mexico’s peso currency deepened losses against the dollar after publication of the data. At 9.23 a.m. local time, the peso was down by 0.6 percent against the greenback.

Inflation in Latin America’s no. 2 economy stood at 4.00 percent in March, at the upper limit of the central bank’s target range. The bank aims for inflation of 3 percent, with a tolerance threshold of one percentage point above or below.

Mexican consumer price inflation had slowed earlier this year, slipping as low as 3.89 percent during the first two weeks of February, the lowest rate in more than two years.

That helped fuel expectations among some analysts that the central bank could begin cutting interest rates later this year.

The central bank last month held its benchmark lending rate steady at 8.25 percent, the highest level in over 10 years. The bank’s board pointed to economic uncertainty and the risks over the credit ratings of state oil firm Pemex.

Compared with the previous two- week period, prices fell by 0.03 percent during the first half of April, the agency said.

The core price index, which strips out some volatile food and energy prices, climbed 0.40 percent in early April. ( Reporting by Miguel Angel Gutierrez; Writing by Dave Graham Editing by Marguerita Choy)