UPDATE 1-Brazil's mid-October inflation remains above target ahead of election
(Adds table, background, market reaction) By Silvio Cascione BRASILIA, Oct 21 (Reuters) - Brazil's annual inflation rate remained above the official target in mid-October, providing ammunition to opposition candidate Aecio Neves just days before a tightly contested presidential election. Consumer prices rose 6.62 percent in the 12 months through mid-October, according to the IPCA-15 price index released on Tuesday by statistics agency IBGE. The inflation rate was slightly below market consensus of 6.65 percent in a Reuters poll, but remained above the 6.5 percent ceiling of the government's target range. Prices rose 0.48 percent from mid-September, up from 0.39 percent in the previous month. Inflation is a politically sensitive issue in a country traumatized by runaway prices in the past. Although price rises are now much better contained than they were 20 years ago, higher inflation contributed toward tarnishing the popularity of reelection candidate Dilma Rousseff. The government has blamed the recent inflation spike partly on higher beef prices, which rose 2.4 percent in mid-October. Beef prices rose sharply due an increase in exports to Russia. Neves responded with a TV ad saying the government wanted Brazilians to buy chicken instead of beef. "Are you going to replace beef for eggs? No, I will change the government," the ad says. In the full month of September, Brazil's annual inflation rate hit the highest in nearly three years at 6.75 percent. Recent polls showed Rousseff gaining momentum in the election campaign but still locked in a dead heat with Neves ahead of Sunday's runoff vote. Stubbornly high inflation has raised prospects of interest rate increases next year. Yields on interest rate futures <0#2DIJ:> rose sharply on Tuesday. October September - Food and beverages 0.69 0.28 - Housing 0.80 0.72 - Household articles 0.13 0.43 - Apparel 0.70 0.17 - Transport 0.25 0.45 - Health and personal care 0.37 0.30 - Personal expenses 0.40 0.31 - Education 0.08 0.20 - Communication 0.00 0.56 - IPCA-15 0.48 0.39 (Reporting by Silvio Cascione; Editing by Chizu Nomiyama)
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