Reuters: US Dollar Report: RPT-UPDATE 2-Brazil Nov inflation unexpectedly faster on airfares, fuel

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RPT-UPDATE 2-Brazil Nov inflation unexpectedly faster on airfares, fuel Dec 7th 2012, 12:56 Tweet Share this Email Print Fri Dec 7, 2012 6:32am EST * Consumer inflation up 0.6 pct from October * Data suggests scant room for further rate cuts * Transportation prices accelerate on airfares, fuel By Silvio Cascione SAO PAULO, Dec 7 (Reuters) - Brazil's inflation rose faster than forecast in November due to higher transportation prices, suggesting little room remains for the central bank to further cut interest rates, data showed on Friday. Brazil's benchmark IPCA consumer price index rose 0.60 percent in November, surpassing all 35 forecasts in a Reuters poll, government statistics agency IBGE said. The index had been expected to rise 0.50 percent, according to the median forecast. The IPCA rose 0.59 percent in October. In the 12 months through November, consumer inflation rose to 5.53 percent compared with a rise of 5.45 percent in the 12 months through October. The government targets inflation at 4.5 percent, with a tolerance margin plus or minus 2 percentage points. Although the annual inflation rate remains within the government's goal, the unexpected rise highlights the risks in cutting interest rates further next year. In standard monetary policy worldwide, central banks raise interest rates to curb inflation and lower htem to stimulate economic growth. The central bank, which slashed borrowing costs ten straight times to a record low of 7.25 percent, has signalled it will likely leave its benchmark Selic rate on hold for a long time to keep a lid on inflation as the economy picks up steam. Central bank president Alexandre Tombini reiterated late on Thursday that the interest rates should remain at their current level for a "prolonged" period. Before that, several banks such as Barclays and Itau BBA started to bet on further rate cuts to stimulate economic growth, which disappointed in the third quarter. Yields on interest rate futures rose after the inflation numbers were released, suggesting traders saw a lower probability of interest rate cuts next year. Transportation prices rose 0.68 percent in November, up from 0.24 percent in October, on higher airfares, fuel and new automobile prices. Food prices slowed to a rise of 0.79 percent, from 1.36 percent in October. Below is the result for each price category: November October - Food and beverages 0.79 1.36 - Housing 0.64 0.38 - Household articles 0.47 0.37 - Apparel 0.86 1.09 - Transport 0.68 0.24 - Health and personal care 0.32 0.48 - Personal expenses 0.53 0.10 - Education 0.05 0.05 - Communication 0.31 0.31 - IPCA 0.60 0.59 Tweet this Link this Share this Digg this Email Reprints Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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