UPDATE 2-Mexico's inflation hits 15-month high on fresh produce prices

(Adds comments from central bank’s Heath)

MEXICO CITY, Sept 9 (Reuters) – Rises in the prices of fruits and vegetables and goods pushed Mexican annual inflation in August to its highest level in 15 months, about half a percentage point above the rate the finance ministry says it will fall to by the end of the year.

Consumer prices rose 4.05% in the year through August, the highest since a reading of 4.28% in May 2019, the national statistics agency said on Wednesday.

The reading was slightly higher than analysts forecast in a Reuters poll

However, Mexico’s central bank, which holds its next monetary policy meeting on Sept. 24, still has space for further rate cuts, deputy Governor Jonathan Heath said on call hosted by Moody’s on Wednesday.

The central bank, which has cut its benchmark lending rate by 375 basis points since August last year to 4.5%, targets consumer price inflation of 3%, with a one percentage point tolerance band above or below that figure.

The finance ministry on Tuesday said inflation would end the year at 3.5% in its 2021 budget proposal delivered to Congress.

Compared with the previous month, prices increased 0.39% in August, including a 2.97% jump in fruit and vegetable prices. The core price index, which strips out some volatile elements, rose 0.32% on the month.,

The core annual rate of inflation advanced to 3.97%. (Reporting by Frank Jack Daniel Editing by Chizu Nomiyama and Andrea Ricci)

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