Brazil's monthly inflation slows, annual rate remains above target

SAO PAULO, July 10 (Reuters) - Brazil's monthly inflation slowed for the fourth time in a row in June, but the annual rate ticked up and remained well above the official goal, data showed on Thursday, prompting the central bank to release a letter to justify missing the target.

Consumer prices as measured by the benchmark IPCA index rose 0.24% in June, government statistics agency IBGE said, down from the 0.26% increase reported in the previous month but above the 0.20% rise expected by economists polled by Reuters.

Prices were up 5.35% in the 12 months through June, IBGE added, exceeding the 5.32% registered in May. Economists had also expected the June rate to come in at 5.32%.

Brazil's central bank has an inflation target of 3%, plus or minus a margin of 1.5 percentage points, known as a "tolerance interval", which was exceeded for the ninth consecutive month.

Central bank governor Gabriel Galipolo released an open letter to the country's monetary council later in the day to justify missing the target, as per Brazilian rules.

Galipolo reaffirmed that the bank is committed to bringing the rate back to the goal after policymakers last month hiked interest rates to 15%, the highest since July 2006, and signaled they would keep them steady for a prolonged period.

"The central bank has taken the necessary steps to ensure that inflation returns to the range defined for the tolerance interval and reaches the inflation target of 3.00%," he wrote.

In the letter, Galipolo added the central bank expects the accumulated inflation rate over 12 months to return to the tolerance interval from the end of the first quarter of 2026.

"There's little in the Brazilian June CPI print that changes our view that last month's hike marked the end to Copom's tightening cycle," Capital Economics emerging markets economist Kimberley Sperrfechter said.

"But a lot will now depend on how the trade dispute with the U.S. plays out and what happens to the real."