UPDATE 1-Brazil's annual inflation falls below 10 pct in mid-March

miércoles 23 de marzo de 2016 08:56 GYT

(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)