(Adds table, background)
BRASILIA, May 21 Brazil's annual inflation rate
rose only slightly in mid-May, paving the way for the central
bank to stop raising interest rates at its monetary policy
meeting next week.
Consumer prices as measured by the IPCA-15 price index
rose 6.31 percent in the 12-month period through
mid-May, nearly unchanged from the 6.28 percent rate seen at the
end of April, government statistics agency IBGE
said on Wednesday.
The index rose 0.58 percent from mid-April, broadly in line
with market expectations in a Reuters poll.
While the inflation rate remains very close to the 6.5
percent ceiling of the central bank's target range, the numbers
showed that a sharp increase in food prices has lost steam as
the government expected.
Food prices rose 0.88 percent in the month through mid-May,
less than half the pace seen one month before.
The sharp increase in food prices over the past few months
was a key reason for the central bank to extend the series of
interest rate hikes that took its benchmark Selic rate to a
two-year high of 11 percent. As food inflation moderates, many
economists expect the central bank to pause its rate-hiking
cycle at its upcoming May 27-28 meeting.
Yields on interest rate futures were slightly down,
suggesting traders pared bets on an additional 25 basis-point
rate increase next week.
Below is the result for each price category:
- Food and beverages 1.84 0.88
- Housing 0.58 1.19
- Household articles 0.24 0.29
- Apparel 0.37 0.67
- Transport 0.54 -0.33
- Health and personal care 0.69 1.20
- Personal expenses 0.50 0.51
- Education 0.14 0.08
- Communication -0.61 0.17
- IPCA-15 0.78 0.58
(Reporting by Silvio Cascione Editing by W Simon)