April 9, 2019 / 3:23 PM / 2 months ago

UPDATE 1-Mexico inflation rises in March on higher gasoline prices

(New throughout, adds background, details)

By Daina Beth Solomon

MEXICO CITY, April 9 (Reuters) - Mexico’s annual inflation ticked up slightly in March, the statistics institute said on Tuesday, spurred by a jump in gasoline prices that has raised red flags with the government.

In a sign of his concern, President Andres Manuel Lopez Obrador said he was considering creating a chain of government pumping stations if existing fuel outlets did not start charging “fair prices.”

Mexican consumer prices rose 4.00 percent in March from the same month a year earlier, the data showed. <MXCPIA = ECI> Consumer prices rose 4.37 percent in January and 3.94 percent in February from the prior year periods.

Softer inflation this year and the resulting pause on interest rate hikes had helped offset concerns about growth in the wider economy since Lopez Obrador the last quarter of 2018, when Lopez Obrador took office.

Tuesday’s data showed that prices for gasoline, domestic-use gas, lemons and tomatoes rose. Declines in prices for products such as chili peppers and potatoes helped contain the overall inflation reading.

A sharp jump in gasoline prices was widely credited with contributing to the last government’s unpopularity and eventual electoral defeat. Lopez Obrador has promised that prices of the fuel will not rise above inflation.

Consumer prices rose 0.39 percent in March from the prior month, according to non-seasonally adjusted figures. The core index, which strips out some volatile food and energy prices, rose 0.34 percent during the month.

The central bank is targeting inflation of 3 percent by the first half of 2020. Last month, it held its benchmark lending rate steady at 8.25 percent, its highest level in more than a decade.

March inflation was in line with estimates from a Reuters survey, which predicted a 4.02 percent rise at the end of the month.

Last week, Mexico’s finance ministry lowered its 2019 growth estimate to between 1.1 percent and 2.1 percent, compared to a previous estimate of between 1.5 percent to 2.5 percent. (Reporting by Noe Torres and Daina Beth Solomon; Editing by Frank Jack Daniel and David Gregorio)

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