SAO PAULO: Brazilian inflation was higher than expected in the month through mid-January, which could complicate the government's plans to continue cutting interest rates and provide stimulus for the economy.
The benchmark IPCA consumer price index rose 0.65 percent in the month to mid-January, government statistics agency IBGE said on Tuesday.
While inflation on a 12-month basis declined to 6.44 percent, its lowest level in nine months, that was little comfort for some economists who believe that price pressures could be a major recurring problem in 2012.
The bank targets annual inflation of 4.5 percent, with a "tolerance band" of 2 percentage points in either direction.
Inflation ended 2011 at 6.50 percent, slipping within the official target in the final weeks of the year in a pleasant surprise for President Dilma Rousseff's economic team. But the tactical victory provided small relief for investors worried her government has placed too much emphasis on economic growth.
The goal for growth, reflected in policies aimed at expanding economic activity this year more than most economists forecast, could cause inflation to graze the top of the target range again in 2012 if the central bank continues cutting interest rates as many expect.
Brazil cut its benchmark interest rate by half a percentage point for the fourth consecutive time last week in a bid to shield its fragile economic recovery from the European debt crisis and a global slowdown. Most economists expect another two such cuts in 2012.
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