PREVIEW-Brazil inflation seen steady in October

By Vanessa Stelzer SAO PAULO, Nov 9 (Reuters) - Inflation in Brazil likely remained stable in October from the previous month, reinforcing the view that the central bank may not need to raise interest rates any time soon, a Reuters poll showed on Monday. The median forecast of 30 economists surveyed by Reuters saw the benchmark IPCA consumer price index, which the central bank uses when setting interest rates, rising 0.23 percent after climbing 0.24 percent in September.

Estimates in the poll ranged from 0.19 percent to 0.30 percent. Well-behaved prices among foods, particularly among dairy products and non-processed foods, will not be enough to slow inflation further, said Miriam Tavares, head of foreign exchange at AGK Corretora in Sao Paulo. That's because of pressure from transportation costs, including seasonal highs among fuels and the gradual return of an industrial tax on automobiles, previously relaxed by the government to boost the economy during recession, she said. The economists polled expect the IPCA to end 2009 at 4.3 percent, according to the median forecast of 10, with estimates ranging from 4.2 to 4.4 percent. In the 12 months to September the index has risen 4.34 percent. Policymakers have a 4.5 percent annual inflation target for 2009 and 2010, plus or minus 2 percentage points. Central bank policymakers used that target as a guide when they cut 500 basis points off the benchmark interest rate earlier this year to a record low 8.75 percent. The rate was left unchanged at the past two meetings. (Writing by by Luciana Lopez; Editing by Kenneth Barry) Keywords: BRAZIL ECONOMY/INFLATION ([e-mail]; Reuters Messaging: [e-mail]; Tel: [phone]) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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