MEXICO CITY (AP) _ Mexico is sticking by its forecast of a 12 percent rise in consumer prices this year and is confident that the peso's volatility eventually will subside.

In an appearance before the Senate Thursday, Mexican Treasury Secretary Jose Angel Gurria said that although the economy is expected to slow down in the second half of 1998, he believes it is still on track to expand between 4.5 percent and 5 percent.

Mexico's gross domestic product rose 5.4 percent in the first six months of the year.

Gurria said economic growth would slow due to the global financial crisis and lower oil prices, which have led to a sharp rise in domestic interest rates.

While he didn't indicate at what level the peso should trade against the U.S. dollar, he said he expected it to return to ``its level.'' The peso closed Thursday at 10.12 to $1. It hit a record low of 10.605 on Sept. 11.