Brazil's Sao Paulo inflation up 0.3pc in July

SAO PAULO: Consumer prices in Sao Paulo, Brazil's largest metropolitan area, rose more than expected in July from June.

The IPC-FIPE index increased 0.3 percent last month, compared with an increase of 0.01 percent in June, according to the FIPE economic research institute on Thursday.

The index was expected to climb 0.26 percent, according to the median forecast of 13 analysts surveyed by Reuters.

Estimates ranged from 0.22 percent to 0.3 percent.

Among the categories tracked, clothing rose the most. Food and transportation costs also advanced in the month after a dip in June.

The FIPE index is closely watched by economists as an indicator of trends in Brazil's benchmark IPCA consumer price index, which is used by the central bank as a guide in setting interest rates.

The IPCA index for July will be released on Friday. Analysts expect it to rise slightly month on month from June. The 12-month IPCA index should remain above a central bank target for the fourth month in a row.

The central bank has hiked interest rates five times this year to try to rein in inflation. However, policymakers have been reluctant to raise rates steeply because that would further feed a worrisome currency rally.

Copyright Reuters, 2011