Brazil's Lula blames inflation on consumption rise

SAO PAULO, May 20 (Reuters) - Brazilian President Luiz Inacio Lula da Silva on Tuesday blamed the country's accelerating inflation on a rise in consumption and said the government would work to balance out the market.

Lula made his comments the same day as two separate inflation indexes stirred concerns about inflation in Brazil.

"The fault lies with those who buy and sell," Lula said in a speech at the Heliopolis slum in Sao Paulo. "Inflation is the worst misfortune for people who live on salaries, because inflation eats up salaries."

The central bank raised interest rates by a higher-than-expected 50 basis points last month, and Lula vowed on Monday the government would do "whatever it takes" to keep inflation pressures at bay.

The so-called FIPE index, which tracks consumer prices in Sao Paulo, rose 0.89 percent in the month-long period through May 15, and the wholesale-heavy IGP-M index jumped 1.54 percent in the 30 days through May 10.

Lula reiterated inflation was being caused by a rise in food prices, fueled by higher consumption not only in Brazil, but also in China, India, Africa and Latin America.

The solution, he said, was greater food production.

"What we are working towards is a perfect balance between the country's production and demand. At a time when the people can buy more, the industries need to produce more."

Brazil's central bank is expected to raise rates by another 50 basis points in June, according to a recent Reuters poll, but some analysts expect a steeper increase. (Reporting by Carmen Munari; Writing by Ana Nicolaci da Costa; Editing by Leslie Adler)