* Inflation to stabilize above target, economists say
* Consumer prices rise 0.35 in Sep vs Aug
* 12-month rate eases to 5.86 pct, from 6.09 pct in August
* Month-on-month core measures rise in September
By Silvio Cascione
SAO PAULO, Oct 9 (Reuters) - Brazil's annual inflation hit
its lowest rate this year as food price increases remained
restrained after a sharp increase in late 2012.
Brazil's benchmark IPCA consumer price index
rose 5.86 percent in the 12 months through September, easing
from its 6.09 percent 12-month advance in the prior month,
government statistics agency IBGE said on Wednesday.
However, a pick-up in the monthly rate, led by higher
apparel and transport costs, suggested inflation will likely
stay for months well above the center of the government's
inflation target range.
That could prompt the central bank to signal additional
interest rate increases at the end of its monetary policy
meeting later on Wednesday.
The central bank targets inflation of 4.5 percent, with a
tolerance margin of 2 percentage points. September's reading
matched the median forecast in a Reuters poll of 29 economists.
Economists see the annual inflation rate stabilizing at its
current level and ending this year at 5.82 percent, according to
the median forecast of analysts surveyed in a weekly central
bank poll released on Monday.
RESTRAINED FOOD PRICES
In the month of September alone, the IPCA index
rose 0.35 percent, up from 0.24 percent in August. Average core
measures, which strip out the most volatile prices such as some
food items, gained 0.45 percent, up from 0.41 percent in the
previous month, according to Banco Fator calculations.
Food and beverage prices, the weightiest component of the
IPCA index, rose 0.14 percent, a meager increase from the 0.01
post rise in August.
That was a far cry from skyrocketing food prices in late
2012 and early 2013 following a severe drought in the United
States, which sent up prices of several products like corn and
soy. Bad weather in Brazil had also increased prices of tomatoes
In January this year, food and beverage prices rose 1.99
percent and than begin slowly moderating their advance, thus
helping cool overall inflation.
FUEL PRICE HIKE SEEN
But offsetting the moderating influence of food prices could
be an anticipated price rise in fuel, which could send prices
higher of transport, another key component of the IPCA index,
which rose 0.44 percent in September.
Analysts widely expect the government to authorize
state-owned Petroleo Brasileiro SA to hike fuel
prices by year-end, which would also drive inflation higher.
Brasilia has stopped state-owned Petrobras from raising
gasoline prices since January to help keep inflation in check,
eroding the company's ability to finance its $237 billion
five-year investment plan.
Intent on lowering inflation towards the center of the
target next year, the central bank is widely expected to raise
its benchmark rate by 50 basis points on Wednesday
to 9.50 percent, the highest among the world's largest
economies, according to a Reuters poll on Friday.
The bank could also signal additional rate increases in
November and early next year, some economists say, which would
lead the so-called Selic rate back to double-digit levels after
staying at record lows for nearly a year.
A preview of the IPCA index for September, the IPCA-15
, already showed annual inflation below 6 percent in
the month to mid-September. The IPCA-15 index is also calculated
Below is the result for each price category in October:
- Food and beverages 0.14 0.01
- Housing 0.62 0.57
- Household articles 0.65 0.89
- Apparel 0.63 0.08
- Transport 0.44 -0.06
- Health and personal care 0.46 0.45
- Personal expenses 0.20 0.39
- Education 0.12 0.67
- Communication -0.04 0.02
- IPCA 0.35 0.24