Brazil IGP-M price index rises 0.44pc in August

The IGP-M index climbed 0.44 percent in August, the Getulio Vargas Foundation research group said on Tuesday, following a 0.12 percent drop in July and 0.18 percent decline in June.

The index was expected to rise 0.42 percent, according to the median forecast of a dozen economists polled by Reuters. Estimates ranged from 0.38 percent to 0.47 percent.

A drop in Brazil's June economic activity, weaker manufacturing data and flagging retail sales have led many economists to forecast weaker growth this year, but the labor market remains tight, fueling higher wages and spending.

The IGP-M is closely monitored by analysts and investors because it provides a broad look at wholesale and consumer prices in Latin America's largest economy. It also allows investors to watch price trends in the construction industry.

The wholesale component of the index, which accounts for about 60 percent of the overall IGP-M, rose 0.57 percent in August, compared with a 0.22 percent drop in July.

The consumer price component, which has a 30 percent weighting in the index, gained 0.21 percent this month compared to a 0.13 decline a month earlier.

Increases in the construction costs index, which accounts for the rest of the index, edged up 0.16 percent in August after jumping 0.59 percent in July.

The IGP-M data precedes the government's Sept. 6 release of official its official IPCA inflation index for the same month.

Copyright Reuters, 2011