UPDATE 1-Brazil monthly inflation up 0.51 pct in mid-April, above forecast

Fri Apr 19, 2013 8:59am EDT

Related Topics

* IPCA-15 index at top-end of official target range
    * Housing prices up on fading effect of energy price cuts


    By Silvio Cascione
    SAO PAULO, April 19 (Reuters) - Brazil's inflation rose
slightly more than expected in the month to mid-April driven by
higher food and housing costs, signal ling the central bank will
remain under pressure to keep raising interest rates despite a
fragile economic recovery, data showed on Friday. 
    Brazil's benchmark IPCA-15 inflation index 
accelerated to 6.51 percent in the 12 months to mid-April, at
the top end of the government's target range of 4.5 percent plus
or minus 2 percentage points. 
    The index rose 0.51 percent on a monthly basis. The median
forecast of 26 economists projected an increase of 0.46 percent.
    Quickening inflation prompted the central bank to raise its
benchmark interest rate from a record low of 7.25 percent to
7.50 percent on Wednesday. However, policymakers hinted future
hikes will be modest, raising concerns among investors who see
inflation above 5 percent for years ahead. 
    "The inflation outlook is still worrisome. There are no
signs of slowdown or that inflation will stabilize at a lower
level," said Newton Rosa, chief economist at SulAmerica
Investimentos, in Sao Paulo. "The effect from the drop in
electricity rates has already faded."
    
    Housing prices, which include electricity rates, rose 0.68
percent in the month to mid-April, reversing a decline of 0.70
percent in the previous reading. The government-sponsored cut in
electricity rates was part of President Dilma Rousseff's efforts
to tame price increases and foster economic growth.
    Food prices increased 1.00 percent, slowing from a rise of
1.40 percent in mid-March but remaining as the leading driver of
consumer inflation in Brazil, even though wholesale food prices
have slowed sharply in recent months.
    The so-called diffusion index, which measures the number of
items with price increases and has been closely watched by the
central bank, dropped to 68 percent from 74 percent in
mid-March, according to private economists.
    Below is the result for each price category:    
    
                                March     April
                                               
 - Food and beverages            1.40      1.00
 - Housing                      -0.70      0.68
 - Household articles            0.40      0.39
 - Apparel                       0.48      0.44
 - Transport                     0.32     -0.01
 - Health and personal care      0.42      0.63
 - Personal expenses             0.51      0.48
 - Education                     0.50      0.10
 - Communication                 0.27     -0.09
                                               
 - IPCA-15                       0.49      0.51
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