November 9, 2016 / 11:22 AM / 2 years ago

UPDATE 2-Brazil's inflation eases below 8 percent in October

(Adds services inflation)
    BRASILIA, Nov 9 (Reuters) - Brazil's annual inflation rate
in October fell below 8 percent for the first time since
February 2015, keeping the door open for small interest rate
cuts as a recession lingers.
    Prices rose 7.87 percent in the 12 months through October,
down from an annual increase of 8.48 percent in the previous
month, statistics bureau IBGE said on Wednesday. 
    The inflation rate was slightly lower than the median
forecast of 7.90 percent in a Reuters poll.
    Prices rose 0.26 percent from September, the lowest monthly
increase for October since 2000, IBGE said. 
    With inflation on a downward path, the central bank cut
interest rates last month from a decade high to help lift the
economy out of a two-year downturn. 
    Economists expect the bank to lower its benchmark interest
rate by at least 25 basis points later this month. A steeper cut
is possible but would depend on a faster drop in prices for
services, the central bank has reiterated in recent weeks.
    However, services prices, which the central bank has
followed closely because monetary policy affects them more
directly, accelerated their increase in October from September
due to a 10 percent surge in airfares. 
    Services prices rose 0.47 percent in October, up from an
increase of 0.33 percent in September, according to calculations
by research firm MCM Consultores. 
    Yields on interest rate futures <0#2DIJ:> rose in early
trading, mostly following global market instability after the
election of Donald Trump as the next U.S. president.
    Below is the result for each price category: 
 --------------------------- October      September 
 - Food and beverages         -0.05        -0.29     
 - Housing                     0.42         0.63      
 - Household articles         -0.13        -0.23     
 - Apparel                     0.45         0.43     
 - Transport                   0.75        -0.10     
 - Health and personal care    0.43         0.33     
 - Personal expenses           0.01         0.10     
 - Education                   0.02         0.18     
 - Communication               0.07         0.18     
 - IPCA                        0.26         0.08     
 (Reporting by Silvio Cascione; Editing by Lisa Von Ahn)
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