UPDATE 1-Brazil inflation slows, posts smallest monthly gain in over a year
(Adds background, data on food, airfares, electricity) By Silvio Cascione BRASILIA, Sept 10 (Reuters) - Brazil's inflation slowed in August as food prices and airfares dropped, giving President Dilma Rousseff and the central bank some respite after a dramatic increase earlier this year. Consumer prices in Brazil rose 9.53 percent in the 12 months through August, down from an increase of 9.56 percent in July in the first such drop this year, statistics agency IBGE said. On a monthly basis, the benchmark IPCA consumer price index slowed to an increase of 0.22 percent in August from July, its smallest advance in 13 months and far less than the previous month's 0.62 percent jump. Annual inflation remains close to a 12-year high and is more than twice as high as the official target of 4.5 percent. However, price rises are expected to slow down over the next year after the central bank raised interest rates to a nine-year-high of 14.25 percent and the economy slipped into recession. Inflation was driven down in August by a sharp, seasonal drop in prices of perishable foods such as tomatoes and onions. Airfares also fell remarkably, 25 percent from July, as rising unemployment reduces demand for flights. Electricity rates dropped for the first time since March 2014, falling 0.42 percent from July. The decline underscored the view that the bulk of the increases in government-regulated prices this year is already over,as Rousseff scrambles to plug a growing budget deficit that cost Brazil its investment-grade rating by Standard & Poor's. Brazil's inflation has slowed despite a dramatic currency drop in recent months to near record lows. While the weaker exchange rate has not yet notably translated into higher consumer prices, it may compel the central bank to raise interest rates in the future if it affects inflation expectations, the bank said in the minutes of its latest rate-setting meeting. Below is the result for each price category: August July - Food and beverages -0.01 0.65 - Housing 0.29 1.52 - Household articles 0.37 0.86 - Apparel 0.20 -0.31 - Transport -0.27 0.15 - Health and personal care 0.62 0.84 - Personal expenses 0.75 0.61 - Education 0.82 0.00 - Communication 0.14 0.30 - IPCA 0.22 0.62 (Reporting by Silvio Cascione Editing by W Simon)
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