(Corrects 6th paragraph to say currency moves will only drive monetary policy insofar as they impact current inflation)
BRASILIA/SAO PAULO, June 8 (Reuters) - Brazil’s inflation rate edged up more than expected in May, suggesting it may have resumed an upward trend even before the effects of a nationwide truckers’ strike fully kicked in, according to data released on Friday.
Consumer prices tracked by the benchmark IPCA index rose 0.40 percent from April and 2.86 percent in the twelve months through May, government statistics agency IBGE said. Economists polled by Reuters had forecast readings of 0.30 percent and 2.73 percent, respectively.
Inflation is likely to get an unexpected boost in June after protesting truckers blocked major highways in the final weeks of May, blocking supplies to key industries in Latin America’s largest economy.
Several economists cut their gross domestic product (GDP) forecasts in the wake of the strike, although its impact is still unclear. With supplies of feed cut short, millions of chickens had to be slaughtered prematurely, likely bumping up poultry prices.
That should add to calls for the central bank to increase interest rates in the wake of a recent selloff in the Brazilian real, which is likely to generate additional inflationary pressure by bumping up import prices.
The bank has repeatedly stressed that currency moves will only drive monetary policy insofar as they spill over into current inflation and expectations.
Inflation undershot the official target range last year for the first time since the inflation targeting regime’s inception in the 1990s. Since then, the central bank cut rates to an all-time low, but double-digit unemployment rates and widespread idle capacity have kept a lid on price hikes. (Reporting by Bruno Federowski and Gram Slattery Editing by Nick Zieminski)
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