Inflation in Brazil slowed in the month to mid-March as expected, though consumer prices measured on an annual basis surged past the government's inflation target, underscoring expectations the central bank will raise borrowing costs as soon as next month. The benchmark IPCA inflation index rose 0.55 percent in the month to mid-March, nearly matching the 0.54 percent median forecast of 10 economists surveyed by Reuters. Estimates for the IPCA ranged from 0.49 percent to 0.62 percent.
The IPCA had climbed 0.94 percent in the month to mid-February, statistics agency IBGE said on Tuesday. The central bank, which uses the IPCA index as a guide when setting interest rates, has a 4.5 percent annual inflation target for 2010 and 2011, plus-or-minus 2 percentage points.
In the 12 months to mid-March the index jumped 5.09 percent, compared with 4.63 percent in the year to mid-February and 4.83 percent in the year through the end of February. Education costs that normally jump in the beginning of the year as schools adjust tuition fees, eased in the month to mid-March, helping bring the IPCA index lower, the IBGE said. Education costs rose 0.55 percent, compared with the 4.55 percent surge in the month to mid-February.
Transportation prices rose 0.41 percent to mid-March, slowing from the 1.28 percent increase to mid-February, also contributing to bring inflation lower. The so-called IPCA-15 tracks consumer prices from around the 15th of one month to the 15th of the next. The index also sets the value of tens of billions of dollars of Brazilian inflation-indexed government bonds.