Thursday, September 30, 2010

Agriculture Drives Brazil IGP-M Price Index Up In September

SAO PAULO (Dow Jones)--Brazil's general price index, known as the IGP-M, rose 1.15% in September compared with an increase of 0.77% in August as agricultural prices soared, the private Getulio Vargas Foundation said Wednesday.

The latest figure was in line with analysts' expectations, which ranged from an increase of between 0.96% and 1.30%, according to the Estado news agency. The September IGP-M figure measured prices between Aug. 21 and Sept. 20.

The rolling IGP-M inflation rate for the 12 months through Sept. 20 was 7.77%.

Agricultural prices soared in September, boosting producer and consumer prices. This increase was mostly driven by tradable items, reflecting the climb in global agricultural commodity prices. By contrast, the institute noted that lower domestic steel prices and the waning effect from the hike in iron ore moderated increases in manufactured components.

"Price surveys that we monitor indicate that increases in agricultural prices will remain strong in [data published in] coming weeks, maintaining IGP inflation [is] high, and raising consumer prices," Goldman Sachs said in a research note. For October, however, IGP-M inflation should decline to a range between 0.70% and 0.80%, being driven by a moderation in agricultural prices, and lower steel and iron ore prices, Goldman said.

Wholesale prices, which account for 60% of the overall index, increased 1.60% in September, compared with a rise of 1.24% in August.

Consumer prices, which account for 30% of the total, rose 0.34%, compared with a fall of 0.27% a month earlier.

Construction costs, which account for 10% of the total, increased 0.20% compared with a rise of 0.22% a month earlier.

With recent inflation figures showing signs of acceleration, last month, the central bank raised the country's Selic reference rate by 50 basis points to 10.75% a year.

-By Matthew Cowley, Dow Jones Newswires; +55-11-3544-7082;

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