UPDATE 1-Brazil's inflation shoots above forecasts in mid-June

viernes 19 de junio de 2015 08:40 GYT

(Adds table, market reaction, details on lottery and food
    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
    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)