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Mexico price rises don't augur lasting inflation pick-up: Carstens

MEXICO CITY (Reuters) - Mexico's central bank chief Agustin Carstens said on Thursday that a recent increase in prices does not reflect a sustained pick-up in inflation and that the slide in the peso currency was exaggerated.

Carstens said a depreciation in the peso had boosted core inflation but added that exchange rate fluctuations should not automatically affect prices across the board.

Mexico's annual inflation rate accelerated to its highest level in two years in December, as the peso <MXN=D2> plumbed record lows over fears about the incoming U.S. administration of President-elect Donald Trump.

Trump has vowed to tear up a joint 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 U.S. market.

Uncertainty over the economic outlook had caused an overreaction in the peso's nominal exchange rate, Carstens said.

Speaking earlier at the same event in Mexico City, Finance Minister Jose Antonio Meade said the Mexican economy grew about 2.2 percent last year, which would mark a slowdown from 2.5 percent growth reached in 2015.

An official estimate for Mexican gross domestic product (GDP) in 2016 is due to be published by the national statistics institute on Jan. 31.

Mexico's government forecast growth of 2.0 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.

A double digit hike in gasoline prices this month that has spurred protests, looting and road blocks across the country, is also seen fanning inflation higher according to some analysts.

(Reporting by Michael O'Boyle; Editing by David Gregorio)

 

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