UPDATE 1-Brazil's inflation hits highest level in nearly 12 years

viernes 6 de febrero de 2015 07:45 GYT

(Adds data, background)
    By Walter Brandimarte and Silvio Cascione
    RIO DE JANEIRO, Feb 6 (Reuters) - Consumer prices in Brazil
rose at the fastest pace in nearly 12 years in January on higher
transportation and electricity rates, reflecting President Dilma
Rousseff's new approach toward mending the country's beleaguered
    Brazil's benchmark IPCA consumer price index 
rose 1.24 percent in January, in line with analysts' forecasts.
That was the highest monthly rate since February 2003.
    In the 12 months through January, prices rose
7.14 percent, well past the government's 4.5 percent inflation
target and the 6.41 percent rate notched in December.
    For years, Rousseff had been criticized by investors for
trying to rein in inflation by delaying increases in prices and
other costs under the government's control.
    Intent on winning back investor confidence and fending off a
credit downgrade, she changed tack after narrowly winning
re-election in October. Electricity rates and bus fares, among
the biggest drivers of inflation last month, jumped 8 percent.
    Economists say the pent-up price pressure is so high that
inflation could stay above 7 percent throughout 2015. Gasoline
and diesel prices went up in February on higher taxes, and
electricity rates are set to climb even further in coming
    Food prices also rose sharply last month, by 1.48 percent,
driven by a severe drought that also threatens to cause water
rationing in Brazil's largest city and financial hub, Sao Paulo.
    Brazil's economic growth ground to a halt last year and
according to many economists is set to fall into recession in
    Yields on interest rate futures <0#DIJ:> gained in early
trading in Sao Paulo as traders added bets that the central bank
will continue raising interest rates to keep a lid on prices.
    Brazil's benchmark Selic rate is currently at 12.25 percent
, after three consecutive rate hikes.    
    Below is the result for each price category:     
                                  January    December
 - Food and beverages                1.48        1.08
 - Housing                           2.42        0.51
 - Household articles               -0.28        0.00
 - Apparel                          -0.69        0.85
 - Transport                         1.83        1.38
 - Health and personal care          0.32        0.47
 - Personal expenses                 1.68        0.70
 - Education                         0.31        0.07
 - Communication                     0.15        0.00
 - IPCA                              1.24        0.78

 (Reporting by Walter Brandimarte in Rio de Janeiro and Silvio
Cascione in Brasilia; Additional reporting by Pedro Fonseca;
Writing by Silvio Cascione Editing by W Simon)