Mexico annual inflation rises to fastest rate since June

Mexico's annual inflation rate in February rose to its fastest since June on a surge in food costs while core inflation showed only modest pressure from a deep slump in the peso, data showed on Wednesday.

Inflation in the 12 months through February rose 2.87 percent, the national statistics agency said. That compared with a forecast of 2.94 percent in a Reuters poll and 2.61 percent rise in January.

Before beginning to rise in January, Mexico's annual inflation rate posted record lows every month since last May, the longest period ever in which price gains stayed below the central bank's 3 percent target.

However, policymakers in Latin America's No. 2 economy raised interest rates in December following a move by the U.S. Federal Reserve and surprised the market with another hike last month in a bid to support the battered peso.

Consumer prices rose 0.44 percent in February compared with the prior month, below estimates of a 0.50 percent increase, driven mostly by higher egg and onion costs.

The core index, which strips out some volatile food and energy prices, rose 0.36 percent from January compared

with 0.35 percent seen in the poll.

The 12-month core inflation rate rose 2.66 percent compared to a forecast 2.67 percent and a 2.64 percent

rate in January, reflecting only modest pressure from higher import prices due to a weakening peso.

After the central bank on Feb. 17 raised interest rates and began intervening in the foreign exchange market, the peso has

recovered some ground from an all-time low, but the currency is still down more 3 percent this year against the dollar.