Mexico inflation in December was lowest in more than 3 years

New throughout, adds details from report

MEXICO CITY, Jan 9 (Reuters) - Mexico's consumer price inflation ended the year at its lowest level since August 2016, the national statistics agency reported on Thursday, fueling expectations of additional rate cuts by the central bank.

Mexican consumer prices rose 2.83% in the year through December, the agency said, below the 2.97% increase registered in November. Lower pressure on prices of some agricultural and energy products drove the decline in inflation, the agency said.

The rate slightly exceeded the 2.76% increase forecast in a Reuters poll of analysts.

Nevertheless, inflation was the lowest recorded since August 2016, which saw a 2.73% increase in consumer prices.

The bank of Mexico targets inflation of 3%, and inflation has dipped below that level in recent months, giving the bank room to cut rates. In December, Mexico's central bank reduced its key interest rate to 7.25%, the fourth straight rate cut.

The closely watched core price index, which strips out some volatile food and energy prices, rose 3.59% annually and 0.41% during the month.

Core inflation has been slow to cool, but that may be changing, Goldman Sachs analyst Alberto Ramos wrote in a note to investors.

"Recent prints showed some hopeful signs that the core inflation curve is bending down," he wrote.

Consumer prices MXINFL=ECI rose 0.56 percent in December, according to non-seasonally adjusted figures.

(Reporting by Sharay Angulo; writing by Julia Love; Editing by David Gregorio)

((Julia.Love@thomsonreuters.com, @byJuliaLove; 52 (55) 5282-7131;))

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