(Adds detail, quotes) BRASILIA, Oct 28 (Reuters) - Inflation in Brazil is not a problem and the recent spike caused by rising food and fuel prices is transitory, Adolfo Sachsida, economic policy secretary at the economy ministry said on Wednesday. Speaking in an online event hosted by Safra Bank, Sachsida also said social distancing could return to pre-pandemic levels in mid-December, which will help reduce unemployment and extend the economic recovery already underway. “I’m not worried about inflation. When you look at expectations for this year and the next, inflation is totally under control,” Sachsida said. “Inflation is not a problem.” The latest measure of consumer inflation in the month to mid-October was 0.94%, the highest for any October since 1995. Annual inflation rose to 3.52%, still below the central bank’s official goals for this year and next, but some economists say it bears close attention. The central bank is expected to keep its benchmark Selic interest rate on hold at a record low 2.00% later on Wednesday, with some economists predicting it will close the door to further easing due to the recent spike in inflation. Sachsida said the biggest challenges for Brazil’s economy next year are employment, credit and fiscal consolidation, adding that austerity is the best thing for Brazil, especially the poor, as it will keep inflation and interest rates low. He said unemployment will fall next year as social distancing restrictions ease and the dominant services sector gains momentum.