UPDATE 1-Brazil October inflation quickens unexpectedly - News

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UPDATE 1-Brazil October inflation quickens unexpectedly

By: AFX | 11 Nov 2009 | 07:03 AM ET

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SAO PAULO, Nov 11 (Reuters) - Brazilian inflation unexpectedly stepped up its pace in in October but remained within government targets for the year, underscoring the possibility that policy-makers might not need to raise interest rates soon. The benchmark IPCA consumer price index rose 0.28 percent in October, quickening from a 0.24 percent increase in September, the government's statistics agency IBGE said on Wednesday. The index's increase in the 12 months through October was 4.17 percent, slower than the 4.34 percent in the 12-month period through September. The index had been expected to climb 0.23 percent last month, according to the median forecast of 30 economists surveyed by Reuters. Estimates ranged from a 0.19 percent to 0.3 percent rise. Brazil's central bank uses an inflation target as a guide in setting the country's benchmark interest rate, the Selic. The target for 2009 is 4.5 percent, plus or minus 2 percentage points. Fuel costs pushed prices higher in October, as did communication costs, including fixed-line telephone expenses. Prices accelerated in five of nine IPCA groups in October, as compared with their inflation rate in September. Three sectors slowed their advance.

Health and personal care expenses remained steady. The Selic currently stands at a record-low 8.75 percent. Analysts expect policymakers to keep the rate steady through the end of 2009 and perhaps beyond. For more details on the IPCA report for October, see: http://www.ibge.gov.br/home/presidencia/noticias/noticia_visualiza.php?id_noticia=1492&id_pagina=1 (Reporting by Rodrigo Viga Gaier and Elzio Barreto; Writing by Luciana Lopez, editing by W Simon z) Keywords: BRAZIL ECONOMY/INFLATION (luciana.f.lopez@thomsonreuters.com; Reuters Messaging: luciana.f.lopez.thomsonreuters.com@reuters.net; Tel: +5511-5644-7756) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved.

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