UPDATE 1-Brazil's annual inflation eases, but remains above target

viernes 5 de diciembre de 2014 07:55 GYT
 

(Adds inflation data and context)

RIO DE JANEIRO Dec 5 (Reuters) - Annual inflation in Brazil eased slightly in November but remained above the ceiling of the official target, adding pressure on the central bank to keep raising interest rates to battle high prices.

Consumer prices, as measured by the IPCA index, rose 6.56 percent in the 12 months through November, easing from 6.59 percent in October, government data showed on Friday. The number came in below the median estimate of 6.59 percent in a Reuters poll.

On a monthly basis, consumer prices rose 0.51 percent in November, compared with 0.42 percent in October.

High government spending and a tight labor market are threatening to push annual inflation this year above the 6.5 percent ceiling of the official government target for the first time in over a decade. If annual inflation ends the year above the target, central bank chief Alexandre Tombini will have to draft a public letter to explain why the goal was not met.

The central bank targets inflation at 4.5 percent for each calendar year with a tolerance margin of 2 percentage points. The last time it overshot that goal for a calendar year was in 2003.

The central bank started to increase rates in October and stepped up its monetary tightening on Wednesday in an attempt to quell inflation and help President Dilma Rousseff regain the trust of investors.

Rousseff has promised to rein in public spending to curb high inflation, which has weighed on business and consumer confidence and kept the Brazilian economy stuck in a rut over the last four years.

She picked fiscal conservative Joaquim Levy as her next finance minister to clean up the country's finances and maintain its coveted investment-grade credit rating.

A pick up in food prices and personal expenses were the main drivers of the monthly inflation increase in November, government data showed. (Reporting by Felipe Pontes; Writing by Alonso Soto; Editing by W Simon)