UPDATE 1-Brazil inflation nears 10 pct in year to mid-October

miércoles 21 de octubre de 2015 07:37 GYT

(Adds table, data and market reaction)
    By Silvio Cascione
    BRASILIA, Oct 21 (Reuters) - Brazil's annual inflation rate
approached 10 percent in mid-October after gasoline, food and
cooking fuel prices rose, complicating efforts to lift the
country out of its worst recession in decades.
    Consumer prices gained 9.77 percent in the 12 months through
mid-October, the highest rate since December 2003
and far above the government's target of 4.5 percent, government
statistics IBGE said on Wednesday. 
    Inflation stood at 9.57 percent in mid-September.
    On a month-on-month basis, the IPCA-15 index 
rose 0.66 percent in the month to mid-October, up from 0.39 in
the previous month. The index had been expected to rise 0.68
percent, according to the median forecast in a Reuters poll.
    Prices of cooking gas and gasoline rose 10.2 percent and 1.7
percent in the month to mid-October after state-run Petroleo
Brasileiro SA raised fuel prices to adjust for a
massive currency drop..
    The hikes were the latest in a series of increases in
government-regulated prices and taxes this year to help narrow a
swollen budget deficit. Food prices also climbed sharply, with
an increase of 0.62 percent from mid-September.
    Taken together, the battery of price rises and levies has
crimped consumer demand, contributing to a recession seen at
about 3 percent this year.
    High inflation also makes it difficult for the central bank
to cut interest rates to stimulate the economy.
    Indeed, yields on interest rate futures rose after the
mid-October data were published <0#DIJ:>, but not as much as to
suggest traders changed bets on the outcome of a central bank
rate-setting meeting later on Wednesday. All the 48 economists
polled by Reuters last week expect the benchmark Selic rate to
remain unchanged at a nine-year-high of 14.25 percent.
    Below is the result for each price category:    

                                  October   September
 - Food and beverages                0.62       -0.06
 - Housing                           1.15        0.68
 - Household articles                0.12        0.36
 - Apparel                           0.58        0.36
 - Transport                         0.80        0.78
 - Health and personal care          0.55        0.50
 - Personal expenses                 0.56        0.51
 - Education                         0.17        0.24
 - Communication                     0.08        0.01
 - IPCA-15                           0.66        0.39


 (Reporting by Silvio Cascione Editing by W Simon)