UPDATE 1-Brazil inflation speeds above forecast in mid-May

* Brazil’s IPCA inflation index rises 0.63 pct to mid-May

* Annual inflation 5.26 pct to mid-May

(Recasts, adds details)

SAO PAULO, May 20 (BestGrowthStock) – Brazil’s inflation sped above
forecasts in the month to mid-May, underscoring rising price
pressures that could signal an overheating economy.

Brazil’s benchmark IPCA inflation index (BRIPCA=ECI: ) rose
0.63 percent in the month to mid-May, accelerating from a 0.48
percent gain in the month to mid-April, the government’s
statistics agency, IBGE, said on Thursday.

The index had been expected to rise 0.58 percent, according
to the median forecast of 26 economists surveyed by Reuters.
Estimates for the IPCA ranged from 0.55 percent to 0.65
percent.

In the 12 months to mid-May the index jumped 5.26 percent,
compared with 5.22 percent in the year to mid-April and 5.26
percent in the year through the end of April.

The central bank, which uses the IPCA index as a guide when
setting interest rates, has a 4.5 percent annual inflation
target for 2010 and 2011, plus or minus 2 percentage points.

Central bank policy makers hiked Brazil’s benchmark
interest rate, the Selic, to 9.5 percent from a record-low 8.75
percent in April, Brazil’s first rate increase in nearly two
years.

The more inflation accelerates, the likelier the bank is to
tighten the Selic to try to control consumer price increases.

Food pressures continued to pull the index higher,
increasing 1 percent over the previous month. But costs for
clothing and health and personal care also edged higher, and
transportation costs picked up sharply as well.

Communication prices eased a bit, however, the only
category in the index to drop.

The IPCA-15 tracks consumer prices from around the 15th of
one month to the next. The index also sets the value of tens of
billions of dollars of Brazilian inflation-indexed government
bonds.

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UPDATE 1-Brazil inflation speeds above forecast in mid-May