UPDATE 3-Brazil narrowly meets 2014 inflation target

viernes 9 de enero de 2015 10:30 GYT
 

(Adds comments from central bank, Finance Ministry)
    By Silvio Cascione
    BRASILIA, Jan 9 (Reuters) - Brazil's government just met its
2014 inflation target, welcome news for policymakers expected to
keep raising interest rates to regain investors' confidence and
maintain prices under control.
    The inflation rate as measured by the benchmark IPCA index
ended 2014 at 6.41 percent, government statistics agency IBGE
said on Friday. That was in line with analysts' forecasts. 
    Brazil targets annual inflation of 4.5 percent, with a
tolerance margin of 2 percentage points. 
    High inflation has haunted President Dilma Rousseff since
she took office in 2011 and will probably continue to be a major
concern this year. Rousseff's new economic team, tasked with
shoring up public finances, has repeatedly hinted at tax hikes
and fuel and electricity price increases, which would put upward
pressure on inflation and fuel discontent among voters.
    The December IPCA index "doesn't spell the end of the
country's inflation battle," wrote Neil Shearing, chief emerging
markets economist at Capital Economics in London.
    In a statement, Alexandre Tombini, president of Brazil's
central bank, reiterated that it would do "whatever is
necessary" to bring inflation back to 4.5 percent in 2016.
Economists expect interest rates to keep rising in coming months
from the current 11.75 percent. 
    Consumer prices rose 0.78 percent in December
from the previous month. The result matched the median of 23
market estimates in a Reuters poll.
    Food and transportation prices rose sharply in December from
November. Airfares jumped more than 40 percent as the holiday
season started, while basic staples such as potatoes and beans
spiked more than 10 percent.
    Inflation will probably accelerate in January due to
upcoming increases in school tuition and recent bus fare hikes,
Finance Minister Joaquim Levy said on Friday. 
    Higher transit fares have raised concerns of street protests
following massive demonstrations in 2013. Activist group Free
Fare Movement will hold a demonstration later on Friday in Sao
Paulo, but it was unclear whether the group would be able to
rally the broader population.
    
    Below is the result for each price category:     
    
                             December  November
 - Food and beverages            1.08      0.77
 - Housing                       0.51      0.69
 - Household articles            0.00     -0.04
 - Apparel                       0.85      0.39
 - Transport                     1.38      0.43
 - Health and personal care      0.47      0.42
 - Personal expenses             0.70      0.48
 - Education                     0.07      0.21
 - Communication                 0.00      0.08
                                               
 - IPCA                          0.78      0.51
 
 (Additional reporting by Walter Brandimarte and Pedro Fonseca;
Editing by Lisa Von Ahn)