UPDATE 1-Soaring food prices drive Brazil inflation to 12-year peak

viernes 5 de febrero de 2016 08:01 GYT

(Adds food and transportation prices, background)
    By Silvio Cascione
    BRASILIA, Feb 5 (Reuters) - Soaring food prices drove
Brazil's inflation to a new 12-year high, adding to pressure on
the central bank to raise interest rates despite a deep
    Consumer prices, as measured by the benchmark IPCA index
, rose 1.27 percent in January, accelerating from
0.96 percent in December, the government said on Friday. The
January reading was above all analyst forecasts in a Reuters
    Prices rose 10.71 percent in the 12 months to January, up
from 10.67 percent in the year to December, to hit the highest
level since November 2003.
    Food prices jumped 2.28 percent in January from 1.50 percent
in December as a strong El Nino weather pattern caused floods
and disrupted production of fresh vegetables like tomatoes and
    It was the steepest monthly increase in food prices since
December 2002.
    Transportation prices also rose sharply, by 1.77 percent,
from 1.36 percent in December, lifted by a increase in urban bus
fares and gasoline taxes, triggering violent street protests
last month, especially in Sao Paulo.
    A separate inflation measure including wholesale prices also
topped all market expectations earlier on Friday. The IGP-DI
index calculated by the Getulio Vargas Foundation 
rose 1.53 percent in January, driven by high industrial prices
as Brazilian currency, the real, trades near a record
    The price increases are much lower than in previous bouts of
hyperinflation but still contributed to a sharp drop in consumer
confidence and in the popularity of President Dilma Rousseff.
    Government officials and economists expected inflation to
ease with the anticipated fading of the impact of last year's
hikes in taxes and regulated utility and energy prices.
    Betting the recession would ease inflation, the central bank
held off on raising interest rates from 14.25 percent last month
, but a government source told Reuters this week the
bank could resume hiking rates if inflation expectations rose.
    The Selic rate has nearly doubled since 2013 from a record
low of 7.25 percent.
    Below is the result for each price category: 
                               January      December  
 - Food and beverages          2.28         1.50     
 - Housing                     0.81         0.49      
 - Household articles          0.45         0.46     
 - Apparel                    -0.24         1.15     
 - Transport                   1.77         1.36     
 - Health and personal care    0.81         0.70     
 - Personal expenses           1.19         0.57     
 - Education                   0.31         0.22     
 - Communication               0.22         0.43     
 - IPCA                        1.27         0.96     
 (Reporting by Silvio Cascione Editing by W Simon)