UPDATE 1-Brazil's inflation shoots above forecasts in mid-June
(Adds table, market reaction, details on lottery and food prices) By Silvio Cascione BRASILIA, June 19 (Reuters) - Brazil's inflation rose more than expected in the month to mid-June, defying the central bank's efforts to keep price expectations under control with successive interest rate increases. Consumer prices as measured by the IPCA-15 index rose 0.99 percent in the month to mid-June, up from 0.60 in the previous month, statistics agency IBGE said on Friday. The index had been expected to rise 0.85 percent, according to the median forecast in a Reuters poll. The annual inflation rate spiked to 8.80 percent from 8.24 percent in mid-May, nearly twice as much as the official target of 4.5 percent and at the highest since December 2003. The inflation spike has sent consumer confidence to record lows and eroded the popularity of President Dilma Rousseff, who has pledged to do "the possible and the impossible" to rein in prices. Yields on interest rate futures, which rose in early trading in Sao Paulo, showed the central bank is expected to raise its benchmark Selic interest rate in July and possibly in September to at least 14 percent, the highest among the world's 10 largest economies. A steep 38-percent increase in lottery prices, which are controlled by the government, drove inflation up in the first half of June, IBGE said. The rise was part of Finance Minister Joaquim Levy's efforts to increase public revenues and safeguard the country's investment-grade rating. Electricity rates and fuels taxes have also risen sharply since the beginning of the year. An unusual mid-year increase in food prices boosted inflation as well, according to IBGE data. Prices for onions, tomatoes and carrots shot up, especially in the northeastern city of Recife, due to irregular rains. Below is the result for each price category: June May - Food and beverages 1.21 1.05 - Housing 1.03 0.85 - Household articles 0.69 0.41 - Apparel 0.68 0.80 - Transport 0.85 -0.45 - Health and personal care 0.87 1.79 - Personal expenses 1.79 0.18 - Education 0.18 0.09 - Communication 0.08 0.22 - IPCA-15 0.99 0.60 (Reporting by Silvio Cascione; Editing by Chizu Nomiyama)
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