* IPCA index slightly above forecasts as food prices gain
* 12-month inflation rises to 5.20 percent
By Silvio Cascione
SAO PAULO, Aug 8 (Reuters) - A spike in food prices pushed up Brazil’s inflation rate in July but probably not fast enough to stop the central bank from cutting interest rates this month for the ninth straight time.
The fading impact of tax breaks on car sales also fueled inflation last month, official data showed on Wednesday.
Brazil’s benchmark IPCA consumer price index rose 0.43 percent in July, accelerating from a gain of 0.08 percent in June and slightly above analysts’ forecasts, government statistics agency IBGE said.
Nearly half of July’s inflation was due to a spike in food costs, as bad weather pushed up prices of fresh vegetables such as tomatoes and carrots.
That was already forecast by analysts, who expect the central bank to cut interest rates at least twice again this year, to 7.25 percent, to revive the economy.
“This rise will not happen again in the coming months. This was due to a supply shock, not a trend,” said Ines Filipa Marques Pereira, economist at ICAP Brasil, in Rio de Janeiro.
“It didn’t change my forecasts for interest rates at all.”
Brazil’s economy, which surpassed Britain’s last year to become the world’s sixth-largest, is poised to grow less than 2 percent in 2012, braking sharply from a 7.5 percent boom just two years ago.
Intent on reviving growth and keeping unemployment near record lows, the Brazilian central bank has slashed its overnight lending rate eight consecutive times since August 2011 to an all-time low of 8 percent.
Yields on rate futures rose after the data was released, suggesting that traders see a slightly lower probability of rate cuts being extended for a longer period. But the futures market still overwhelmingly expects a rate cut at the next central bank monetary policy meeting, scheduled for Aug. 29.
The rate cuts are part of a broad government push to jump-start the economy, dragged down by high production costs and weak global demand. Brazil will announce more stimulus measures to aid the country’s struggling manufacturers in coming weeks, Finance Minister Guido Mantega said on Monday.
Inflation in the 12 months through July rose to 5.20 percent from 4.92 percent in the 12 months through June. Still, it remained comfortably within the central bank’s target of 4.5 percent plus or minus 2 percentage points.
Price rises will likely become a concern only next year if the economy accelerates as expected, analysts say. The median market forecast for inflation in 2013 is 5.5 percent, according to a central bank survey of economists.
Food prices rose 0.91 percent in July, IBGE said, up from a gain of 0.68 percent in June. Transportation prices fell 0.03 percent in July, following a decline of 1.18 percent in June, due to tax breaks aimed at stimulating car sales.
Automobile production rose 8.8 percent and sales gained 3.1 percent in July from June, the national automakers’ association said on Monday.
Elsewhere in Latin America, the spike in food prices has likely pushed Mexican inflation to its highest in more than two years in July, according to a Reuters poll.
Inflation remained tame in Chile, though, with prices unchanged from June.
Brazil’s inflation had been expected to rise 0.38 percent in July, accelerating from a gain of 0.08 percent in June, according to the median forecast of 28 analysts polled by Reuters. Estimates ranged from 0.30 percent to 0.45 percent.