The government also said it would exempt from taxation up to 6,000 reais from stock-market gains and profit-sharing plans, and announced new tax brackets setting out rates payable on gains larger than that. The highest would be 27.5 percent on earnings of 15,000 reais or more.

The government expects to forgo around 1.7 billion reais in tax income as a result of the new exemptions.

Both measures, which were announced by the office of President Dilma Rousseff, will take effect on Jan. 1 and will be published in the official journal on Wednesday. They must still be formally approved by Congress.

The increase in the minimum wage was higher than the 670.95 reais that had been proposed in the government's draft budget for 2013, which was sent to Congress at the end of August.

Economists forecast 2012 consumer price inflation will come in at 5.7 percent.

Center>Copyright Reuters, 2012