Mexico inflation picks up less than forecast in May

MEXICO CITY (Reuters) - Mexican consumer price inflation accelerated less than expected in May, remaining below the central bank's target rate and creating room for more potential interest rate cuts, official data showed on Tuesday.

National statistics agency INEGI said the annual inflation rate picked up to 2.84% from April's figure of 2.15%, which was the lowest rate since 2015. A Reuters poll of analysts had forecast a reading of 2.97%.

The largest price increases were in the energy and agricultural sectors, INEGI said.

Compared with the previous month, consumer prices in May rose 0.38%, according to non-seasonally adjusted figures. The core index, which strips out some volatile food and energy prices, rose 0.30% during the month .

The Bank of Mexico lowered its benchmark rate to the lowest level in 3-1/2 years on May 14, hinting that more cuts could be on the horizon and warning the coronavirus pandemic's effects would be felt more strongly in the second quarter.

(Reporting by Miguel Angel Gutierrez; Editing by Alistair Bell)

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