UPDATE 1-Brazil inflation climbs to near 10 pct, highest since 2003
(Adds inflation drivers, market reaction) BRASILIA, Nov 6 (Reuters) - Brazil's annual inflation rate accelerated in October to just below 10 percent, the highest reading in almost 12 years, after sharp fuel and food price hikes. Consumer prices, as measured by the benchmark IPCA index , rose 9.93 percent in 12 months through October, up from 9.49 percent in September, statistics agency IBGE said on Friday. The number, which was the highest since November 2003, came slightly above a median 9.91 percent forecast in a Reuters poll. On a monthly basis, the IPCA index rose 0.82 percent, up from an increase of 0.54 percent in September. A government-led increase in fuel prices that state-controlled oil producer Petróleo Brasileiro SA recently implemented was responsible for about a third of the month's inflation, IBGE said. Petrobras, as the company is known, raised gasoline and diesel prices by 6 percent and 4 percent, respectively. Food prices also gained traction, led by rising costs for poultry, sugar and beverages. Brazil's annual inflation is running at more than double official target of 4.5 percent, partly because of a string of tax and government-controlled price increases earlier in the year. Accelerating inflation is also taking a toll on economic activity, as Brazil braces for its steepest recession in a quarter century. It has also reduced the probability of interest rate cuts by the central bank next year from the current 14.25 percent, economists say. Yields on interest rate futures <0#2DIJ:> rose in early Friday trading in Sao Paulo. Below is the result for each price category: October September - Food and beverages 0.77 0.24 - Housing 0.75 1.30 - Household articles 0.39 0.19 - Apparel 0.67 0.50 - Transport 1.72 0.71 - Health and personal care 0.55 0.55 - Personal expenses 0.57 0.33 - Education 0.10 0.25 - Communication 0.39 0.01 - IPCA 0.82 0.54 (Reporting by Silvio Cascione; editing by John Stonestreet and W Simon)
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