MercoPress. South Atlantic News Agency

Brazil’s September inflation up 1.15% pushed by food and raw materials prices

The Brazilian currency keeps appreciating against the US dollar

Brazil’s broadest measure of inflation rose the fastest since May in September. Construction, consumer and wholesale prices, as measured by the IGP-M index, rose 1.15% this month.

The index rose 7.77% from the same period a year ago, the Rio de Janeiro-based Getulio Vargas Foundation said in a report released this week on its website.

The monthly increase was led by a 4.56% rise in agricultural products, and a 4.08% in the cost of raw materials. The price of industrial products rose 0.67%.

Wholesale prices, which have a 60% weighting in the IGP-M index, increased 1.60% in September, while consumer prices rose 0.34%, the report said.

The IGP-M will increase 9.20% in 2010, according to the median forecast in a central bank survey of about 100 economists published September 27.

Meanwhile Brazil’s budget deficit in August narrowed to its lowest level since April, putting the country’s ratio of debt to GDP on a “very benign trajectory,” the central bank said Wednesday.

The deficit shrank to 10.5 billion Reais (6.2 billion USD) last month, compared with a 14.3 billion-real gap in July, the Central bank announced Wednesday.

The primary budget surplus, or the surplus before interest payments, rose to 5.22 billion Reais from 2.45 billion Reais the previous month.

Brazil’s central government will post a record primary surplus in September after the government increased its stake in Petrobras, the state-controlled oil company, to 48% from 40% last week, Treasury Secretary Arno Augustin said this week.

Brazil’s central government posted a budget surplus excluding interest payments of 4.0 billion Reais in August, the highest result since April, the Treasury said.

Meanwhile Brazil’s Real rose to the strongest since November (1.70 to the US dollar) after Finance Minister Guiod Mantega said the country isn’t planning to raise taxes on foreign purchases of stocks and bonds “at this time.”

But Guilherme Barros, a columnist for IG news service wrote that the government will increase the tax for foreign exchange inflow transactions after Oct. 3 presidential elections in a bid to curb the Real gains.