April 7, 2017 / 12:44 PM / a year ago

UPDATE 2-Brazil's falling inflation clears way for deep rate cut

 (Adds comments, details on core inflation)
    By Silvio Cascione
    BRASILIA, April 7 (Reuters) - Brazil's annual inflation
eased to the lowest rate since 2010 and came close to the
government's long-missed target, leaving the door open for the
central bank to accelerate the pace of interest rate cuts next
    Consumer prices as measured by the benchmark IPCA index rose
4.57 percent in the 12 months through March, in line with the
median expectation of economists in a Reuters poll and down from
an increase of 4.76 percent in the previous month.
    Prices rose 0.25 percent in March from the previous month,
government statistics agency IBGE said on Friday.
    The government targets inflation at 4.5 percent. Price rises
have slowed rapidly since last year amid an economic recession,
the deepest in the country's history. 
    The central bank has reiterated that lower inflation should
allow it to step up its pace of interest rate cuts to 100 basis
points per meeting at its next meeting on April 12. Brazil's
benchmark interest rate is currently at 12.25 percent.
    "The latest drop in Brazilian inflation leaves it only a
whisker above the central bank's target and probably seals the
deal on a larger 100-basis-point cut in interest rates at next
week’s Copom meeting," wrote Neil Shearing, chief emerging
markets economist at Capital Economics, in a report.
    Prices rose 0.96 percent in the first three months of the
year, the lowest quarterly inflation rate since the Brazilian
real was adopted as a currency in 1994, IBGE said.
    An average of three core inflation measures, that strip out
volatile items such as food prices, slowed to an annual rate of
5.63 percent, the lowest since 2012. Services prices, which are
closely monitored by the central bank, accelerated to 6.05
percent, from 5.95 percent in February.
    "Services and core inflation printed slightly above our
expectation. However, the overall inflation trend, including the
policy-sensitive core-services index, continued to moderate,"
wrote Alberto Ramos, head of Latin America economic research at
Goldman Sachs, in a report.
    Below is the result for each price category:
                                    March    February
 - Food and beverages                0.34       -0.45
 - Housing                           1.18        0.24
 - Household articles               -0.29        0.18
 - Apparel                          -0.12       -0.13
 - Transport                        -0.86        0.24
 - Health and personal care          0.69        0.65
 - Personal expenses                 0.52        0.31
 - Education                         0.95        5.04
 - Communication                    -0.63        0.66
 - IPCA                              0.25        0.33
 (Reporting by Silvio Cascione; Editing by Chizu Nomiyama and
Bernadette Baum)
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below