Higher medicine, food prices stoke Brazil inflation

Consumer prices edged up 0.3 percent in Brazil last month, fueled by higher medicine, clothing and housing prices, with 12-month inflation at 6.5 percent, the state statistics agency said Friday. The May increase, in line with market analysts' forecasts, was lower than the 0.5 percent recorded in April and the lowest since June 2012. The Brazilian Geography and Statistics Institute (IBGE) said medicine prices increased by 0.9 percent in May, clothing by 0.8 percent and housing by 0.7 percent. Central Bank authorities want to bring inflation down to 4.5 percent this year. Last month, the central bank raised its key interest rate by 0.50 points to 8.0 percent to control rising inflation, the second increase within weeks. In April, the bank's monetary policy committee pushed the rate up by 0.25 points to 7.5 percent, the first increase since July 2011. Experts were alarmed in March when it was confirmed that 12-month inflation reached 6.59 percent, above the official upper limit of 6.5 percent. In 2012, Brazilian consumer prices rose 5.8 percent after a 6.5 percent hike the previous year, the highest level in seven years.