UPDATE 1-Brazil's inflation picks up in mid-December as food prices jump
(Adds table, market reaction, background) By Silvio Cascione BRASILIA, Dec 18 (Reuters) - Consumer prices rose in Brazil more than 1 percent in the month to mid-December as food prices soared, increasing the chances the central bank will raise interest rates next year despite a deep recession. Brazil's IPCA-15 consumer price index rose 1.18 percent in the month to mid-December, up from 0.85 the previous month, government statistics agency IBGE said on Friday. The index had been expected to rise 1.11 percent, according to the median forecast in a Reuters poll. In the 12 months through mid-December, consumer prices jumped 10.71 percent, the highest since November 2003 and up from 10.28 percent last month. The government targets inflation at a much lower 4.5 percent, a goal analysts see as unfeasible until at least 2017, even with some of the world's highest interest rates. Brazil's central bank has reiterated in recent weeks that it would take the necessary measures to bring inflation back to the official target in 2017, signaling it might raise interest rates from an already-high 14.25 percent even with the economy in its deepest recession in a generation. Yields on interest rate futures <0#2DIJ:> rose on Friday as traders added bets on rate hikes in 2016. Much of the mid-December price increase was caused by rising food prices, thanks in part to heavy rainfall brought by El Nino. Food prices rose 2.02 percent in the month to mid-December, up from 1.05 percent in the previous month, with prices of perishable vegetables such as onions and potatoes rising the most, according to IBGE. High inflation has hurt not only consumer confidence, but also the popularity of President Dilma Rousseff, threatened with a possible impeachment. Although the current spike remains milder than past hyperinflation, it has been accompanied by the worst recession in decades, with an expected economic contraction of nearly 4 percent this year and more than a million of lost jobs. A separate report by the central bank on Friday showed economic activity fell in October for an eighth month. Below is the result for each price category: mid-Decemb mid-Novemb er er - Food and beverages 2.02 1.05 - Housing 0.69 0.74 - Household articles 0.60 0.07 - Apparel 0.73 0.72 - Transport 1.76 1.45 - Health and personal care 0.61 0.66 - Personal expenses 0.56 0.37 - Education 0.32 0.03 - Communication 0.87 1.04 - IPCA-15 1.18 0.85 (Reporting by Silvio Cascione, editing by Larry King)
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