Consumer prices in Brazil up 0.53% in January amid govt, cenbank feud

Consumer prices in Brazil up 0.53% in January amid govt, cenbank feud

SAO PAULO (Reuters) – Brazils consumer prices as measured by the benchmark IPCA index rose 0.53% in January, slowing down from the previous month and slightly below market forecasts, government statistics agency IBGE said on Thursday.

The fresh data come amid a feud between President Luiz Inacio Lula da Silva and the central bank chief over high interest rates, which stand at a six-year high of 13.75% after aggressive monetary tightening aimed at taming high inflation.

Lula has said the benchmark rate was far too high given the country‘s inflation trajectory, causing an unnecessary drag on growth, while central bank governor Roberto Campos Neto defended the institution’s autonomy to pursue inflation targets.

Prices on an annual basis rose 5.77% in January, down from an increase of 5.79% in the previous month and also below market estimates of 5.8%, although still above the central banks target of 3.25% for this year, plus or minus 1.5 percentage point.

Food and beverages had the biggest impact on inflation last month, IBGE said, followed by higher transportation costs. Apparel prices fell from the previous month, the agency added.

Below is the result for each price category:

January December

– Food and beverages 0.59 0.66

– Housing 0.33 0.20

– Household articles 0.70 0.64

– Apparel -0.27 1.52

– Transport 0.55 0.21

– Health and personal care 0.16 1.60

– Personal expenses 0.76 0.62

– Education 0.36 0.19

– Communication 2.09 0.50

– IPCA 0.53 0.62

(Reporting by Gabriel Araujo; Editing by Steven Grattan)