(Adds comments from central banker, finance minister)
MEXICO CITY, June 9 (Reuters) - Mexico's annual inflation rate eased in May to a record low, pushed lower by summer electricity subsidies and contained by a sluggish economy, but the central bank is still expected to raise interest rates when U.S. borrowing costs move higher.
Inflation in the 12 months through May slowed to 2.88 percent, the national statistics agency said on Tuesday, below the 2.92 percent expected in a Reuters poll, and the 3.06 percent annual rate in April.
The annual rate was the lowest on record according to central bank data going back to 1970.
Speaking after the data release, central bank board member Manuel Ramos Francia told a financial conference that inflation would remain tame in Latin America's second-biggest economy next year.
Last week, the central bank held its key interest rate at a record low of 3 percent, and said inflation would be below its 3 percent target for the rest of the year amid a sluggish economy.
Analysts said the data showed there was no sign of wider price pressures from a sharp slump in the peso currency, underpinning bets that Mexico's central bank will wait to hike rates until after the Fed moves.
The peso hit a record low last week after strong U.S. jobs data backed expectations that the U.S. Federal Reserve will begin raising interest rates later this year and prompt investors to dump risky emerging market assets.
Mexican Finance Minister Luis Videgaray said on Tuesday at the same event that Mexico was well positioned to withstand the shock of higher U.S. rates given that it's economy is growing faster than other emerging-market peers and has relatively low debt levels.
He said that authorities were prepared to use the central bank's reserves, more than $190 billion, to ensure an orderly operation of the peso market.
"We have sufficient liquidity to guarantee the ordered working of the exchange market, even in moments of high volatility that could result above all from the adjustment of U.S. monetary policy," Videgaray said.
Mexico's central bank avoids directly intervening in the market, but the country's exchange commission has activated two different dollar auction programs to suport the peso.
Tuesday's data showed consumer prices fell 0.50 percent in May from April on lower electricity costs as well as lower egg and tomato prices.
Core inflation, which strips out some volatile food and energy costs, rose 0.12 percent. Both were just below expectations in the Reuters poll. (Reporting by Michael O'Boyle and Noe Torres; Editing by W Simon and Alan Crosby)