UPDATE 1-Brazil's inflation tops forecasts in July to highest in 12 years
(Adds details on electricity rates, background) RIO DE JANEIRO, Aug 7 (Reuters) - Brazil's 12-month inflation rate rose more than expected in July, to the highest in nearly 12 years, as electricity rates continued to increase sharply. Consumer prices rose 9.56 percent in the 12 months though July, the highest rate since November 2003, from 8.89 percent in June, statistics agency IBGE said on Friday. The benchmark IPCA index rose 0.62 percent month-on-month, slightly above the median of analysts' forecasts for an increase of 0.60 percent. Electricity rates, one of the leading drivers of Brazil's soaring inflation this year, rose 4.2 percent in July from June. High inflation has compounded Brazil's worst economic crisis in 25 years, helping send the popularity of President Dilma Rousseff and consumer confidence to record lows. The central bank, which targets annual inflation at 4.5 percent, has raised interest rates to nine-year highs since October. It signaled this week it could keep increasing rates if inflation spiked more than expected. Electricity rates have climbed sharply since the beginning of the year as a severe drought depleted reservoirs of Brazil's main hydroelectric plants. Pent-up pressures after years of artificially low prices during Rousseff's first term also contributed to the steep increase in power rates. Rains have returned recently, allowing officials to turn off some of the costly thermoelectric plants that have backstopped Brazil's power system. It remains unclear whether rates could drop in coming months as a result. Other government-regulated prices increased in July, including health insurance, which increased 1.6 percent, and interstate bus fares, which rose 6.3 percent. Below is the result for each price category: July June - Food and beverages 0.65 0.63 - Housing 1.52 0.86 - Household articles 0.86 0.72 - Apparel -0.31 0.58 - Transport 0.15 0.70 - Health and personal care 0.84 0.91 - Personal expenses 0.61 1.63 - Education 0.00 0.20 - Communication 0.30 0.34 - IPCA 0.62 0.79 (Reporting by Silvio Cascione and Rodrigo Viga Gaier in Rio de Janeiro; Editing by Bernadette Baum and Phil Berlowitz)
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