UPDATE 1-Brazil's inflation tops forecasts in February

miércoles 12 de marzo de 2014 08:49 GYT
 

By Silvio Cascione
    BRASILIA, March 12 (Reuters) - Brazil's inflation rose
slightly more than expected in February, led by a sharp,
seasonal hike in school tuition and a strong increase in prices
of home appliances and furniture.
    Brazil's benchmark IPCA consumer price index 
rose 5.68 percent in the 12 months through February, up from
5.59 percent in the prior month, government statistics agency
IBGE said on Wednesday.
    The persistent price pressures despite cooling food
inflation reinforced expectations of higher interest rates in
the coming months. The central bank targets inflation at 4.5
percent, with a tolerance margin of 2 percentage points.
    On a monthly basis, the IPCA index rose 0.69
percent, up from 0.55 percent in January and above the 0.65
percent median forecast of 35 economists.
    Inflation has been above the midpoint of the central bank's
target range for over three years, which last April prompted
policymakers to begin raising interest rates off record lows to
a current 10.75 percent.
    Yields on interest rate futures rose slightly in
early trading, suggesting traders added bets on another 25 bps
rate hike at the central bank's April meeting. 
    "There is also a bigger probability that it raises the Selic
rate by 25 bps once again in May," said Andre Perfeito, chief
economist with Gradual Investimentos.
    Education costs rose 5.97 percent from January, pushed up by
higher tuition at the start of the Brazilian school year. The
increase highlighted Brazil's high services prices, one of the
main inflation drivers over the past few years as unemployment
remains low and wages keep rising.
    The price of household goods rose 1.07 percent in February
from January, driven up by furniture, home appliances and bed
and bath furnishings, all of which rose over 1 percent from the
previous month.
    Food inflation slowed, however, suggesting a hot, dry spell
in Brazil's most populated areas in early February had little
impact so far over food prices.
       
    Below is the result for each price category:     
    
                               February    January
 - Food and beverages                0.56        0.84
 - Housing                           0.77        0.55
 - Household articles                1.07        0.49
 - Apparel                          -0.40       -0.15
 - Transport                        -0.05       -0.03
 - Health and personal care          0.74        0.48
 - Personal expenses                 0.69        1.72
 - Education                         5.97        0.57
 - Communication                     0.14        0.03
                                                     
 - IPCA                              0.69        0.55