UPDATE 1-Brazil inflation in May little changed from April

Wed Jun 10, 2009 8:50am EDT

* Inflation 0.47 pct in May, little changed from April

* 12-month inflation rate slows to 5.2 pct (Recasts, adds details on index)

SAO PAULO, June 10 (Reuters) - Inflation in Brazil was little changed in May from April as an increase in food and beverage prices was partially offset by slower gains in personal spending and health care costs, government data showed on Wednesday.

The benchmark IPCA consumer price index BRCPI=ECI rose 0.47 percent in May, little changed from the 0.48 percent gain in April, statistics agency IBGE said.

The index had been expected to rise 0.46 percent, according to the median forecast of 29 economists surveyed by Reuters. Estimates ranged from a gain of 0.38 percent to 0.53 percent.

Data on inflation and economic activity in recent days may put pressure on the central bank to slow the pace of interest rate cuts as a sooner-than-expected recovery in Brazil's economy may spark an uptick in consumer prices.

Figures released on Tuesday showed gross domestic product shrank less than expected in the first quarter because of an increase in government spending and domestic consumption. The bank has slashed its benchmark Selic rate by 350 basis points since the beginning of the year and is forecast to cut it on Wednesday by 75 basis points to a fresh all-time low.

Food and beverage prices jumped 0.44 percent in May, accelerating sharply from the 0.15 percent gain the previous month, accounting for most of the inflation pressure last month, the IBGE said.

Still, prices of personal expenses rose 1.57 percent, slowing from the 2.14 percent gain in April. Health and personal hygiene costs also eased, rising 0.68 percent in May compared with the 1.1 percent increase the previous month.

The IPCA rose 5.2 percent in the 12-month period through May, lower than the 5.53 percent in the 12 months to April, and compared with 5.44 percent in the year to mid-May, the IBGE said.

Brazil's central bank, which uses the IPCA as a guide when setting interest rates, has a 4.5 percent inflation target for 2009 and 2010 with a tolerance band of plus or minus 2 percentage points.

For details on the IPCA report for May, please see: here (Reporting by Rodrigo Viga Gaier; Writing by Elzio Barreto; Editing by James Dalgleish)

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