Brazil: Inflation accelerates in October driven by food prices
October 20, 2010
According to the mid-month price index (IPCA-15, indice de Precos ao Consumidor Amplo), consumer prices added 0.62% over the same period last month, doubling the 0.31% increase recorded in September. The reading, which overshot market expectations of a 0.55% increase, was driven by an increase prices for food and beverages, which accounts for more than 20% of the index and jumped 1.70% in the period through mid-October. The surge in food prices reflected a temporary supply shock, which was included in the Central Bank's baseline scenario. As a result of the higher-than-expected increase, annual inflation rose to 5.0% in mid-October (September: +4.6% year-on-year). According to the IPCA-15 index, inflation has now exceeded the Central Bank's target rate of 4.5% for two consecutive months. Data for the full month will be released on 9 November. Consensus Forecast participants expect inflation to close the year at 5.2%, which is up 0.1 percentage points from last month's forecast. For 2011, the panel expects inflation to moderate to 5.0%.