UPDATE 2-Brazil to hike fuel prices after 2-1/2 yr freeze

(Recasts, updates with analyst comments, specifies tax, separate impact for diesel)

BRASILIA/RIO DE JANEIRO, April 30 (Reuters) - Brazil will raise refinery-gate gasoline prices 10 percent and diesel prices by 15 percent on May 2 in the first hike in 2-1/2 years, but a tax cut should reduce a subsequent rise in inflation, the government said on Wednesday.

The much-expected decision allowing state-run oil company Petrobras (PETR4.SA)(PBR.N) to raise the prices of two key fuels came after two days of meetings between Petrobras executives, President Luiz Inacio Lula da Silva and his ministers, who were concerned about stoking inflation.

Finance Minister Guido Mantega said shortly after Petrobras announced the hike that the government would reduce the so-called CIDE economic domain tax so motorists at the pump feel no impact from the refinery-gate gasoline jump.

He said CIDE, which will fall to 18 centavos (11 U.S. cents) from 28 centavos a liter of gasoline and to 3 centavos from 7 centavos for diesel, was created as an anti-cyclical tax intended to mitigate the impact of price hikes on consumers.

Diesel prices would still increase over 8 percent for consumers and a huge fleet of trucks and buses, Mantega said.

Inflation has been rising, fueled by growing demand during an economic boom, as well as high food prices.

World oil prices have nearly doubled since the last fuel price hike in Latin America's largest country where Petrobras accounts for nearly all crude production and refining.

Analysts say the price lag for gasoline and diesel is between 20 and 30 percent, which has hit Petrobras cash flow at a time it needs to pump billions of dollars in recent important oil discoveries to boost production. Still, the rise, especially for diesel, exceeded some expectations.