Food prices lift Brazil mid-October inflation to highest since 1995

BY Reuters | ECONOMIC | 10/23/20 08:31 AM EDT

By Jamie McGeever

BRASILIA, Oct 23 (Reuters) - Brazil's IPCA-15 consumer price index rose 0.94% in the month to mid-October, statistics agency IBGE said on Friday, the highest this year and the highest for any October since 1995 as food prices continued to tick higher.

The monthly rate was higher than the 0.81% median forecast in a Reuters poll and more than double the previous month's 0.45% rise. The annual rate of inflation was 3.52%, also more than the 3.40% forecast in a Reuters poll.

Prices rose across almost every sector but once again the main driver was food and drink, as the spike fueled by tight supply and a weak exchange rate extended into another month.

Food prices jumped 2.24% on the month, accounting for almost half of the overall rise, IBGE said. Meat prices rose 4.8% and rice prices jumped 18.5%.

Policymakers and economists say this is a temporary phenomenon, although economists at BNP Paribas recently raised their 2020 annual inflation forecast to 3.5% from 3.0% on the back of it.

Transport costs, including fuel, rose 1.34% on the month, accounting for over a quarter of the index's overall rise, IBGE said. Within transportation costs, the main component was a near 40% increase in air fares.

The accumulated rate of IPCA-15 inflation so far this year is 2.31%, IBGE said. The 3.52% annual rate remains below the central bank's overall inflation goal for this year of 4.00%. (Reporting by Jamie McGeever Editing by Nick Zieminski)

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