UPDATE 1-Brazil's annual inflation falls below 10 pct in mid-March
(Adds annual inflation rate, context) BRASILIA, March 23 (Reuters) - Brazil's annual inflation rate fell below 10 percent in mid-March for the first time in five months, moving closer to the central bank's target range as the recession deepens. Consumer prices as measured by the IPCA-15 index rose 9.95 percent in the 12 months through mid-March, down from a 12-year high of 10.84 percent in mid-February and below all expectations in a Reuters poll. On a monthly basis, the IPCA-15 index rose 0.43 percent from mid-February, down from 1.42 in the previous month, government statistics agency IBGE said on Wednesday. It was the lowest rate for mid-March since 2012. The official inflation target is 4.5 percent, with a tolerance margin of plus or minus 2 percentage points. Annual inflation reached 12-year highs last year close to 11 percent after several increases in taxes and regulated prices and is expected to slow this year to below 6.5 percent, within the official target range, according to central bank president Alexandre Tombini at a Senate hearing on Tuesday. Lower energy rates and airfares and a smaller increase in food prices helped drive inflation lower in mid-March. Food prices had shot up earlier in the year after heavy rain curbed harvests. The power sector, in turn, benefited from a recovery in water levels in hydroelectric dam reservoirs. Lower inflation could encourage the central bank to cut interest rates later this year, economists say, which could help lift the economy out of its worst recession in a generation. Inflation expectations have been falling in recent weeks after a sharp appreciation of the exchange rate to its strongest levels in more than half a year. Brazilian assets have rallied on prospects of an impeachment of President Dilma Rousseff. Mid-March Mid-February - Food and beverages 0.77 1.92 - Housing -0.52 0.40 - Household articles 0.88 0.86 - Apparel 0.44 0.14 - Transport 0.45 1.65 - Health and personal care 0.70 1.04 - Personal expenses 0.70 0.93 - Education 0.67 5.91 - Communication -0.51 0.91 - IPCA-15 0.43 1.42 (Reporting by Silvio Cascione Editing by W Simon)
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