(Recasts lede, adds details and economists' comments)
SAO PAULO, Feb 9 (Reuters) - Brazil's consumer prices
rose slightly less than expected in January, but the latest data
is unlikely to give the central bank room for monetary easing in
the short term despite President Luiz Inacio Lula da Silva's
calls for lower rates.
Prices as measured by the benchmark IPCA index were up 0.53% last month, slowing down from December
and below market forecasts of 0.57%, government statistics
agency IBGE said on Thursday.
On an annual basis, inflation reached 5.77% in January,
down from an increase of 5.79% in the previous month and also
below market estimates of 5.8% - although still above the
central bank's target for this year.
The fresh figures come amid a feud between Lula and the
central bank chief over high interest rates, which stand at a
six-year high of 13.75% after aggressive monetary tightening
aimed at taming high inflation.
Lula has said the benchmark rate was far too high given the
country's inflation trajectory, causing an unnecessary drag on
growth, while central bank Governor Roberto Campos Neto defended
the institution's autonomy to pursue inflation targets.
With the feud and fiscal risks, economists see little room
for rate cuts at the moment despite the emerging downward
inflationary trend.
"The relatively benign picture at the start of the year
won't change the central bank's relatively cautious policy
stance anytime soon," said Andres Abadia, chief economist for
Latin America at Pantheon Macroeconomics.
"What really matters right now is the elevated fiscal
uncertainty, and the political/policy noise, including President
Lula's criticism of the high level of interest rates."
The central bank has kept rates on hold since September
after an aggressive tightening cycle, in which policymakers
hiked the benchmark rate from a record low of 2% in March 2021.
Still, the 2022 full-year inflation result missed both
the central bank's annual target of 3.5% and the top 5% of its
tolerance band, and in 2023 it faces an even tighter target of
3.25% plus or minus 1.5 percentage point.
"With inflation above target, fiscal risks persisting
and the central bank's independence being challenged, interest
rate cuts are unlikely until the fourth quarter at the
earliest," said Capital Economics' senior emerging markets
economist Jason Tuvey.
In January, IBGE said, food and beverages had the biggest
impact on Brazilian inflation, followed by higher transportation
costs. Apparel prices fell from the previous month, it added.
(Reporting by Gabriel Araujo; Editing by Steven Grattan)
