UPDATE 2-Mexico early May inflation dips to over 9-year low
(Adds historical comparison)
MEXICO CITY May 22 (Reuters) - Mexico's annual inflation rate cooled in early May to more than a nine-year low, reinforcing expectations the central bank will hold interest rates steady in the coming months.
Inflation in the 12 months through mid-May eased to 2.93 percent compared with a 3.01 percent rate forecast in a Reuters poll and a 3.06 percent rate for the full month of April.
The figure, which was under the central bank's 3 percent target, was the lowest half-month inflation reading since November 2005.
The central bank said this week that it expects inflation to be slightly below its 3 percent target during the second half of the year and it cut its growth forecast, saying a sluggish economy will help contain price pressures.
The finance ministry then lowered its growth outlook for this year on Thursday after data showed the economy grew in the first quarter at the slowest pace in more than a year.
The central bank is expected to hold its benchmark interest rate steady at 3 percent to support the economy until the U.S. Federal Reserve begins to raise borrowing costs.
Consumer prices fell 0.53 in the first half of May as summer electricity subsidies kicked in and prices for eggs and tomatoes cooled. The poll projected a drop of 0.44 percent.
Core prices, which strip out some volatile food and energy costs, rose 0.03 compared with expectations of 0.12 percent.
The 12-month core inflation rate came in at 2.36 compared with an estimated 2.45 percent.
Mexico's peso slumped to a record low in March, but the central bank says there is no sign that currency weakness has fed into wider price pressures. (Reporting by Alexandra Alper and Michael O'Boyle; Editing by Steve Orlofsky)
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