LATAM WEEKAHEAD-Inflation data in Brazil, Mexico seen mixed

Sun Jun 21, 2009 1:28pm EDT
By Daniel Bases
NEW YORK, June 21 (Reuters) - Inflation data due from Brazil and Mexico lead a light economic calendar for Latin America this week, with some moderation for Brazil but an uptick in Mexican prices forecast.
In Brazil on Wednesday, the mid-month benchmark IPCA consumer price index BRIPCA=ECI is seen rising less than the prior period.
"As administered price adjustments wane, headline inflation should come down," Barclays Capital wrote to clients. The firm forecasts a rise of 0.32 percent versus a rise of 0.59 percent previously.
Morgan Stanley economists expect the IPCA to rise 0.35 percent, saying, "fading pressure from a hike in cigarette prices," as one of the main reasons for the slowdown.
Mexico's mid-June CPI report, also due on Wednesday, is expected to show inflation accelerating over the prior month.
The latest Reuters poll of economists sees the first half of June's core inflation rate rising 0.17 percent MXCPIH=ECI on top of the 0.13 percent rise in the prior period. Headline inflation MXCPIF=ECI is forecast to go up 0.13 percent from a drop of 0.34 percent in the prior period.
"We expect a moderate core gain with non-core inflation reflecting the conflicting forces of a pickup in electricity tariffs and lower perishable food prices," Barclays wrote.
Last Friday the central bank cut interest rates by half of a percentage point to 4.75 percent and said its easing cycle is nearly over as signs of improvement in the economy emerge.
In the latest Reuters poll, Brazil's inflation is expected to dip slightly in May after the rate doubled in the prior month. Analysts still expect it to end the year below the government target 4.5 percent.
The median forecast of 29 analysts see the benchmark IPCA consumer price index, which the central bank uses when setting interest rates, to have risen 0.46 percent in May after a 0.48 percent jump in April.For more click [ID:nN0883400]