UPDATE 1-Brazil's inflation rises in August as Olympics boost hotel prices

viernes 9 de septiembre de 2016 09:32 GYT
 

(Adds background, details)
    BRASILIA, Sept 9 (Reuters) - Brazil's inflation rate rose to
nearly 9 percent in August, when the Rio Olympics added pressure
on services prices, government data showed on Friday, clouding
the outlook for interest rate cuts.
    Consumer prices as measured by the benchmark IPCA index
 rose 8.97 percent in the 12 months through August,
up from an increase of 8.74 percent in the previous month,
statistics agency IBGE said.
    Prices rose 0.44 percent in August, in line with market
forecasts in a Reuters poll.
    Prices of hotel rooms and food in Rio de Janeiro rose much
more than the national average in August as the city hosted the
Olympic Games, IBGE said. Elsewhere in the country, food prices
eased after a surprise surge in previous months, suggesting the
inflation rate could still drop to about 7 percent by year-end,
as economists and policymakers expect.
    "The August IPCA, just like the mid-month data two weeks
ago, came out in line with market expectations, but despite
that, it did not look very good," Banco Fator Chief Economist
José Francisco Gonçalves wrote in a research note. 
    Services prices rose 7.40 percent in the 12 months through
August, up from 7.12 percent in July. An average of core
inflation measures, excluding volatile items such as food
prices, edged up to 7.85 percent from 7.77 percent. 
    The official inflation target is 4.5 percent, a goal last
achieved in August 2010. Inflation has slowed from double-digits
earlier this year as Brazil goes through the second year of a
severe recession, with interest rates at 14.25 percent, their
highest in 10 years.
    Economists widely expect the central bank to start lowering
interest rates in coming months as inflation eases, but there is
no consensus about the timing of the first reduction. The
minutes of the last rate-setting meeting, released on Tuesday,
suggested the central bank could start cutting in October if
inflation expectations drop.    
    
    Below is the result for each price category: 
    
                               August       July      
 - Food and beverages          0.30         1.32     
 - Housing                     0.30        -0.29      
 - Household articles          0.36         0.53     
 - Apparel                     0.15        -0.38     
 - Transport                   0.27         0.40     
 - Health and personal care    0.80         0.61     
 - Personal expenses           0.96         0.70     
 - Education                   0.99         0.04     
 - Communication              -0.02         0.02     
 - IPCA                        0.44         0.52    
    

 (Reporting by Silvio Cascione; Editing by Lisa Von Ahn)