UPDATE 2-Brazil annual inflation rate eases, could pave way for fuel hike
* IPCA-15 index eases below 6 pct for first time this year * Inflation data seen encouraging government to raise fuel prices By Silvio Cascione SAO PAULO, Sept 20 (Reuters) - Brazil's annual inflation rate fell below 6 percent for the first time this year, which could encourage the government to raise fuel prices without putting its inflation target at risk. The national statistics agency IBGE on Friday said the benchmark IPCA-15 consumer price index rose 5.93 percent in the 12 months through mid-September, nearly matching the median forecast of 16 analysts surveyed by Reuters. The central bank's year-end inflation target is 4.5 percent, with a tolerance band of two percentage points either way. The bank uses the IPCA to set its benchmark interest rate, among the highest in the world for a major economy. Brazil's inflation has stayed above the center of the target range for three years even as economic growth sputtered, eroding the central bank's credibility among some investors. President Dilma Rousseff's government has stopped state-owned Petroleo Brasileiro SA from raising gasoline prices since January to help move inflation closer to the target. That choice, however, has restricted the cash available to finance Petrobras' $237 billion five-year investment plan -- an outcome that has only gotten worse since a plunge in Brazil's currency made fuel imports more expensive. "Inflation has been lower than expected over the past few months, which leaves room for an increase in fuel prices," said Andre Muller, an economist with Quest Investimentos, in Sao Paulo. "But core measures remain high, as well as services inflation. The inflation outlook remains worrisome." The government might allow Petrobras to raise gasoline prices about 8 percent by Oct. 21, the date of the first auction of production rights for the Libra subsalt oil field, newspaper O Estado de S. Paulo said on Monday. Transport costs rose 0.3 percent in the month through mid-September, up from a decline of 0.3 percent in mid-August. Expecting an increase in gasoline prices, economists see inflation close to its current level at year-end. The median forecast of 100 economists in a weekly central bank survey with about financial institutions projected a rise of 5.82 percent in consumer prices this year. Intent on lowering inflation expectations for the next few years, the bank led by Alexandre Tombini is seen raising interest rates to 9.75 percent by year-end from 9 percent currently, according to the same poll. Below is the result for each price category: August September - Food and beverages -0.09 0.04 - Housing 0.56 0.53 - Household articles 0.62 0.52 - Apparel -0.12 0.37 - Transport -0.30 0.30 - Health and personal care 0.45 0.56 - Personal expenses 0.51 0.16 - Education 0.69 0.12 - Communication 0.07 -0.07 - IPCA-15 0.16 0.27
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