UPDATE 2-Brazil monthly inflation at fastest since May 2011
* IPCA-15 index up 0.69 pct in month to mid-Dec * 12-month inflation accelerates to 5.78 pct By Silvio Cascione SAO PAULO, Dec 19 (Reuters) - Inflation in Brazil accelerated in the month to mid-December to its fastest monthly rate since May 2011 on higher housing and services prices, surpassing the central bank's forecasts as it tries to stimulate economic growth. Brazil's benchmark IPCA inflation rate rose 0.69 percent in the month to mid-December, slightly above expectations for an increase of 0.66 percent, statistics agency IBGE said on Wednesday. In the 12 months to mid-December, inflation accelerated to 5.78 percent, up from 5.64 percent one month before. The government targets inflation at 4.5 percent with a tolerance margin of 2 percentage points in either direction. "The number was not good," said Luis Otavio de Souza Leal, chief economist at Banco ABC Brasil. "Inflation looks set to rise anyway you look at it," he said. Faster inflation highlights the challenges facing Brazil's central bank, which has been cutting interest rates to spur economic growth but has seen consumer prices above the center of the government's target for over two years. Central bank president Alexandre Tombini has reiterated that inflation will slow towards the center of the government's target if interest rates remain stable at their current level of 7.25 percent, a record low. Tombini's aggressive campaign to lower interest rates, with ten straight cuts since August 2011, has been part of a broader effort by President Dilma Rousseff's government to revive growth in Latin America's largest economy. Brazil, one of the world's fastest growing economies two years ago, is set to grow less than the United States and even Japan in 2012, according to economists' forecasts in a weekly central bank poll. Sticky inflation has challenged the central bank, though. At the beginning of the year, it forecast consumer prices would rise 4.7 percent in 2012. Its current estimate for a rise of 5.2 percent will likely be revised up in its quarterly inflation report, due out on Thursday, analysts said. The bank sees 2013 inflation slowing to 4.8 percent, but analysts expect it to reach 5.4 percent as the economy picks up. On Wednesday, the IBGE said prices of personal expenses rose 1.10 percent in the month to mid-December, up from 0.30 percent in the prior period, as housekeepers' salaries increased 0.82 percent and prices of leisure trips jumped 12.15 percent. Housing costs gained 0.74 percent, up from 0.33 percent in the month to mid-November, on higher electricity rates, rentals and repair costs. Food prices, which helped inflation slow in the previous month, also accelerated with a rise of 0.97 percent after 0.83 percent in the month to mid-November. Poultry, milk and fruits were the main drivers of the rise, IBGE said. The IPCA-15 index had been expected to rise 0.66 percent in the month to mid-December, according to the median of 32 forecasts. Estimates ranged from 0.55 percent to 0.72 percent. In the month to mid-November, the index rose 0.54 percent. Below is the result for each price category: November December - Food and beverages 0.83 0.97 - Housing 0.33 0.74 - Household articles 0.58 0.11 - Apparel 1.40 0.62 - Transport 0.47 0.71 - Health and personal care 0.36 0.26 - Personal expenses 0.30 1.10 - Education 0.04 0.10 - Communication 0.30 0.26 - IPCA-15 0.54 0.69
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