February 22, 2017 / 2:30 PM / a year ago

UPDATE 1-Brazil inflation eases less than expected in mid-February

 (Adds table, background on central bank decision)
    BRASILIA, Feb 22 (Reuters) - Brazil's annual inflation rate
eased less than expected in mid-February and remained above 5
percent, moderating expectations for a deeper interest rate cut
by the central bank later on Wednesday.
    Consumer prices as measured by the IPCA-15 consumer price
index rose 5.02 percent in the 12 months through
mid-February, slowing from an increase of 5.94 percent to
mid-January, statistics agency IBGE said.
    The rise was slightly stronger than market expectations,
with the median forecast in a Reuters Poll standing at 4.99
percent. The government's annual inflation target is 4.5
    "(It) reduces significantly the risk the (central bank's
monetary policy committee) Copom could accelerate the pace of
rate easing to 100 basis points later today," said Alberto
Ramos, head of Latin America economic research at Goldman Sachs.
    A vast majority of economists polled by Reuters expect the
central bank to cut interest rates by 75 basis points after a 75
bps reduction in January.
   But a few analysts and traders did not rule out a bolder move
as inflation expectations had been falling more rapidly than
expected due to a severe recession.
    Prices rose 0.54 percent from mid-January, up from a 0.31
percent gain in the previous month-long period, the IBGE said.
The index had been expected to rise 0.50 percent, according to
the median forecast in a Reuters poll.
    Easing inflation and interest rates are expected to help the
economy emerge from a two-year recession. That could bolster
political support for President Michel Temer's push to have
Congress pass austerity measures.
    In the month to mid-February, education prices rose 5.17 at
the start of the school year.
   Another major inflation driver was a hike in bus fares. Food
prices, however, edged lower.
                             Mid-Jan   mid-Feb
 - Food and beverages           0.28     -0.07
 - Housing                     -0.22      0.18
 - Household articles          -0.23      0.34
 - Apparel                     -0.18     -0.31
 - Transport                    0.71      0.66
 - Health and personal care     0.48      0.83
 - Personal expenses            0.76      0.37
 - Education                    0.18      5.17
 - Communication                0.49      0.84
 - IPCA-15                      0.31      0.54

 (Reporting by Silvio Cascione Editing by W Simon)
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