UPDATE 1-Brazil inflation eases as transport, food prices fall
* IPCA-15 index up 6.40 percent in 12 months to mid-July
* Inflation returns below ceiling of government target
SAO PAULO, July 19 (Reuters) - A drop in transportation and food prices helped Brazil's inflation rate fall back below the ceiling of the government's target in the year to mid-July, data showed on Friday. Brazil's benchmark IPCA-15 inflation index rose 6.40 percent in the 12 months through mid-July, down from 6.67 percent one month earlier, according to government statistics agency IBGE. The index had been expected to rise 6.43 percent in the period, according to the median forecast of 16 analysts surveyed The government targets inflation at 4.5 percent, plus or minus two percentage points. On a monthly basis, inflation was 0.07 percent, below the median analyst forecast and down from 0.38 percent one month earlier.
A number of Brazilian cities including Rio de Janeiro and Sao Paulo lowered bus and subway fares last month in response to protests that grew into nationwide demonstrations against poor public services, police violence and graft. The move contributed to a 0.55 percent drop in transport prices in the month to mid-July. Food prices, one of the main factors fueling inflation earlier this year, fell 0.18 percent from the previous month. The majority view is that Brazilian inflation peaked last month, with most analysts seeing 12-month inflation below 6 percent by year-end. Most of them also call for at least two more interest rate increases by the central bank just to ensure that expectations for next year stay under control.
In recent months, stubbornly high inflation has dented consumer confidence, undermining an already fragile economic recovery and eroding President Dilma Rousseff's high popularity. The central bank has raised interest rates three times since April and has pledged to keep increasing them until inflation slows.
Below is the result for each price category:
June July - Food and beverages 0.27 -0.18 - Housing 0.57 0.60 - Household articles 0.68 -0.06 - Apparel 0.72 -0.17 - Transport 0.10 -0.55 - Health and personal care 0.72 0.20 - Personal expenses 0.37 1.08 - Education 0.17 0.11 - Communication 0.12 0.15 - IPCA-15 0.38 0.07