Brazil's mid-September inflation rebounds on higher housing prices

SAO PAULO, Sept 25 (Reuters) -

Inflation in Brazil sped up in the month to mid-September after briefly dipping into negative territory a month earlier, though it still undershot market expectations, data from statistics agency IBGE showed on Thursday.

The figures come as Brazil's central bank signaled it was entering a "

new stage

" of steady interest rates for a prolonged period, following an aggressive monetary tightening aimed at curbing sticky inflation.

Consumer prices as measured by the IPCA-15 index rose 0.48% in the period, IBGE said, up from a 0.14% decline last month. The reading, nonetheless, came in below the 0.51% increase forecast by economists in a Reuters poll.

In the 12 months to mid-September, inflation reached 5.32%, below the 5.36% expected in the Reuters poll but still far above the central bank's 3% target, which has a tolerance range of 1.5 percentage points on either side.

Brazil's central bank last week

kept

interest rates at a near two-decade high of 15%, signaling a prolonged pause after a tightening cycle that lifted borrowing costs by a total 450 basis points since September 2024.

The bank expects inflation to

hover near

the official goal in the first quarter of 2028, but still fail to meet it.

Prices in the month to mid-September rose in five of the nine groups surveyed by IBGE. Housing prices jumped 3.31% after a 1.13% drop in the previous month, driven by higher electricity costs.

But closely-watched food and beverage prices, which pushed overall inflation higher earlier in the year, fell 0.35% in the period, marking their fourth consecutive monthly decline.

"The overall picture looks benign. The recent rebound in inflation is largely explained by adverse base effects," said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics. "Our base case is for disinflation to continue, with inflation ending the year around 5%." (Reporting by Fernando Cardoso; Editing by Gabriel Araujo)