BRASILIA: Brazil's government just met its 2014 inflation target, welcome news for policymakers expected to keep raising interest rates to regain investors' confidence and maintain prices under control.
The inflation rate as measured by the benchmark IPCA index ended 2014 at 6.41 percent, government statistics agency IBGE said on Friday. That was in line with analysts' forecasts.
Brazil targets annual inflation of 4.5 percent, with a tolerance margin of 2 percentage points.
High inflation has haunted President Dilma Rousseff since she took office in 2011 and will probably continue to be a major concern this year. Rousseff's new economic team, tasked with shoring up public finances, has repeatedly hinted at tax hikes and fuel and electricity price increases, which would put upward pressure on inflation and fuel discontent among voters.
The December IPCA index "doesn't spell the end of the country's inflation battle," wrote Neil Shearing, chief emerging markets economist at Capital Economics in London.
In a statement, Alexandre Tombini, president of Brazil's central bank, reiterated that it would do "whatever is necessary" to bring inflation back to 4.5 percent in 2016. Economists expect interest rates to keep rising in coming months from the current 11.75 percent.
Consumer prices rose 0.78 percent in December from the previous month. The result matched the median of 23 market estimates in a Reuters poll.
Food and transportation prices rose sharply in December from November. Airfares jumped more than 40 percent as the holiday season started, while basic staples such as potatoes and beans spiked more than 10 percent.
Inflation will probably accelerate in January due to upcoming increases in school tuition and recent bus fare hikes, Finance Minister Joaquim Levy said on Friday.
Higher transit fares have raised concerns of street protests following massive demonstrations in 2013. Activist group Free Fare Movement will hold a demonstration later on Friday in Sao Paulo, but it was unclear whether the group would be able to rally the broader population.
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