(Recasts with new projection, adds details on inflation)
SAO PAULO, Sept 29 (Reuters) - Brazilian supermarket association Abras raised its 2016 sales forecast again on Thursday after August data showed demand rising and prices falling from a year earlier.
Sales are now expected to grow 0.7 percent discounting inflation this year, Abras executives told journalists, up from a prior projection of 0.45 percent growth and far better than the 1.8 percent drop forecast earlier this year.
Supermarket sales in Brazil rose 1.7 percent in real terms in August from the same month a year ago, but slipped 2.7 percent from a month before, according to Abras. Sales in the first eight months of the year grew 0.8 percent in real terms from a year ago.
"The sales index shows the economy is improving," said Marcio Milan, an executive at the industry group Abras, striking an optimistic tone after a painful two-year economic slump.
The Abras national sales index compiles data from 2,800 outlets representing about 130 companies that account for 60 percent of supermarket sales in Brazil.
A separate Abras survey showed that the cost of a basic basket of food fell 0.27 percent in August from the previous month, the first decline in a year.
Food inflation stoked by poor harvests of Brazilian staples pushed up the price of the same basket 18 percent in the 12 months through August, according to the survey conducted in collaboration with research firm GfK.
$1 = 3.24 Brazilian reais Reporting by Ana Mano; Editing by Marguerita Choy and Bill Rigby