UPDATE 1-Brazil's annual inflation climbs above 8 pct in March

miércoles 8 de abril de 2015 08:51 GYT
 

(Adds market reaction, details on electricity fares,
background)
    By Silvio Cascione
    BRASILIA, April 8 (Reuters) - Brazil's annual inflation rate
climbed above 8 percent in March though at a slower pace than
expected, government data showed on Wednesday, keeping pressure
on the central bank to raise  interest rates further despite a
broad economic slowdown.
    The benchmark IPCA consumer price index rose
1.32 percent in March, statistics agency IBGE said, slightly
less than expectations for an increase of 1.39 percent in a
Reuters poll but still climbing at its fastest pace since 2003.
    In the 12 months through March, consumer prices 
rose 8.13 percent, the highest rate since December 2003 and well
above the government's 4.5 percent inflation target.
    Brazil's inflation rate has soared in 2015, denting
President Dilma Rousseff's popularity as she opted to pass
higher costs of electricity, gasoline and other regulated prices
on to consumers after years of attempts to keep them low.
    Housing costs rose 5.29 percent in March from February
alone, pushed up by a 22-percent increase in electricity rates
as a severe drought affecting hydroelectric production
heightened risks of energy rationing.
    Food prices also accelerated their advance in March to 1.17
percent from 0.81 percent in the previous month.
    The central bank, intent on keeping inflation expectations
under control, has raised interest rates since October and is
widely expected to keep lifting the key Selic rate 
in the coming months from the current 12.75 percent, the highest
since 2009.
    After the March inflation rate came in lower than expected,
yields on interest rate futures dropped slightly <0#2DIJ:> as
traders pared bets on an aggressive cycle of rate hikes to come.
Yet Brazil's yield curve still implied at least two more hikes
in coming months, to 13.50 percent.
    The central bank's campaign against inflation is likely to
starting bearing fruit next month, according to economists, who
expect monthly inflation readings to ease below 1 percent.
Annual inflation will probably remain close to 8 percent through
this year though, and should only start to ease gradually
towards 4.5 percent next year, according to market forecasts.
    Below is the result for each price category:
      
                                    March    February
 - Food and beverages                1.17        0.81
 - Housing                           5.29        1.22
 - Household articles                0.35        0.87
 - Apparel                           0.59       -0.60
 - Transport                         0.46        2.20
 - Health and personal care          0.69        0.60
 - Personal expenses                 0.36        0.86
 - Education                         0.75        5.88
 - Communication                    -1.16       -0.02
                                                     
 - IPCA                              1.32        1.22
 

 (Reporting by Silvio Cascione)