By Gabriel Burin
(Reuters) - Brazil's inflation picked up slightly in August from July due to the finalization of a one-off discount on energy prices for residential users, a Reuters poll of analysts predicted, while the yearly rate was probably the fastest in six months.
Consumer prices likely increased at a monthly 0.28% rate and 4.67% on the year, the highest since 5.60% in February, according to median estimates of 25 economists polled Sept. 6-11. The data will be released on Tuesday.
"Electricity and fuels led a rise in regulated prices. Service inflation was pressured by adjustments in tuition fees, but with limited impact as a result of a drop in airline fares," said Rafael Pacheco, an economist at Guide Investimentos.
Stable food prices should have helped keep inflation under control, as Brazilian households continue to benefit from a record farm crop that has translated into cheaper livestock feed and fresh produce costs.
Overall, Brazilian inflation has been much lower recently than in 2022, when it hit a high of 12%. But the re-acceleration in August, combined with a rebound in longer-term expectations, are likely to support a cautious mood among policymakers.
After falling to 4.84% in July, the consensus view for inflation at the end of this year in the Brazilian central bank's weekly polls of private economists has been edging up to reach 4.93% this week.
This reflects last month's announcement of strong hikes in fuel prices by state-run oil company Petrobras, which prompted the central bank's governor to anticipate a revision of inflation forecasts.
"However, our expectation is that the 12-month variation in core average measurements should have decreased again ... allowing the gradual cycle of decline in the Selic rate to continue," said Helcio Takeda, senior partner at Pezco.
Banco Central do Brasil has stressed its determination to maintain a moderate policy easing pace of 50 basis point cuts in the benchmark Selic rate per meeting, implying a continuation of its restrictive approach.
Still, current inflation dynamics would point to a third consecutive breach of the country's annual target for consumer prices, set in 2023 at 3.25% plus a margin of 1.5 percentage points.
Although the central bank has primary responsibility in the fight against inflation, discomfort over a new failure could extend to President Luiz Inacio Lula da Silva's government, which so far won plaudits for this year's economic growth.
(Reporting and polling by Gabriel Burin; Editing by Mark Potter)