(Recasts; adds central banker’s comments on gasoline impact)
MEXICO CITY, Jan 12 (Reuters) - Mexico’s central bank chief Agustin Carstens said on Thursday that a recent increase in prices does not reflect a sustained quickening in the pace of inflation and that the slide in the peso currency was exaggerated.
He also said the impact on prices from a recent government-led hike in gasoline costs will be transitory, adding that the central bank could hurt the economy if it overreacts.
A double-digit hike in gasoline prices this month that has spurred protests, looting and road blocks, is seen fanning inflation higher according to some analysts.
Mexico’s annual inflation rate accelerated to its highest level in two years in December, as the peso plumbed record lows over market fears about the incoming U.S. administration of President-elect Donald Trump.
Trump has vowed to tear up a trade deal with Mexico if he cannot renegotiate it to favor the United States, and has also threatened to impose hefty taxes on Mexican-made goods destined for the key U.S. market.
Carstens said the uncertainty over the country’s economic outlook had caused an overreaction in the peso’s nominal exchange rate.
He noted that the depreciation in the peso had boosted core inflation, but added that exchange rate fluctuations should not automatically affect prices across the board.
Speaking earlier at the same event in Mexico City, Finance Minister Jose Antonio Meade said Mexico’s economy grew about 2.2 percent last year, which would mark a slowdown from 2.5 percent growth in 2015.
An official estimate for gross domestic product in full-year 2016 is due to be published by the national statistics institute on Jan. 31.
Mexico’s government forecast growth of 2.0 percent and 2.6 percent in 2016, on “solid” consumption despite weak factory production and lower oil output. The economy posted its fastest growth in more than two years in the third quarter. (Reporting by Michael O‘Boyle, editing by G Crosse)