June 25 (Bloomberg) -- Mexican Finance Minister Agustin Carstens said the government may increase its inflation estimates for this year after prices climbed at almost double the pace economists estimated in the first half of June.

Inflation ``may possibly be a little higher than we had estimated,'' Carstens said today in an interview on Radio Formula in Mexico City. ``With the information that came out yesterday, the Finance Ministry will be reviewing its forecast.''

Consumer prices rose 0.29 percent in the first two weeks of June, more than the 0.15 percent median estimate of 19 economists surveyed by Bloomberg, driven by increases for rice, tomatoes, avocados, electricity and telephone service. The annual pace was 5.28 percent. The central bank raised its benchmark lending rate by a quarter percentage point last week to cool inflation.

The central bank had forecast inflation for the second and third quarters of 4.5 percent to 5 percent. Carstens said in a radio interview March 4 that inflation would be below 3.7 percent at the end of the year.

Mexico's economy probably grew more than 3 percent in the first half of the year as a slowdown in the U.S. had less of an effect than expected, he said. The Finance Ministry still expects Mexico's economic growth of 2.8 percent this year and 4 percent in 2009, Carstens said.

Mexico has been able to weather the U.S. slump because it diversified its exports away from its northern neighbor, Carstens said. Last year, 80 percent of Mexico's exports went to the U.S.

Gasoline Subsidy

``We have been able to unhook part of our economy from the U.S.,'' Carstens said.

In the ``medium to long term,'' it may be necessary to reevaluate the government's subsidy for gasoline, Carstens said.

``It is important to maintain it, for now,'' Carstens said.

Mexico will spend about 200 billion pesos ($19.4 billion) to subsidize energy costs this year, Energy Minister Georgina Kessel said on June 11.

To contact the reporter on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net; William Freebairn in Mexico City at wfreebairn@bloomberg.net.

Last Updated: June 25, 2008 12:04 EDT