June 7, 2019 / 1:46 PM / 3 months ago

UPDATE 1-Brazil inflation slows in May, first decline this year

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By Jamie McGeever

BRASILIA, June 7 (Reuters) - Consumer price inflation in Brazil eased in May, government statistics agency IBGE said on Friday, with the first annual decline this year offering an early sign that inflation may have peaked and is heading back towards the central bank’s target.

Consumer prices rose 4.66% in the 12 months to May, down from 4.90% in April, slightly below the 4.72% median forecast in a Reuters poll of economists and the first decline since December.

The monthly rate of inflation eased to 0.13% from 0.57% in April, down from 0.57% the month before, below expectations of 0.20% and the slowest rate since November.

The biggest driver was food and drink prices, which fell 0.56% on the month, IBGE said, while household goods fell 0.10% in price. The biggest price rise was the 0.98% increase in housing costs in May compared to the previous month.

“What we are seeing is inflation, both in terms of core and other elements, is pretty benign,” said Isabel Guarino, chief economist at XP Asset Management in Sao Paulo.

Annual inflation had hit 4.90% in April, the highest in over two years and moving further above the central bank’s year-end target of 4.25%.

Policymakers earlier this year said inflation would peak around April or May before returning to target. But minutes of their May 7-8 meeting showed they had softened that view slightly, and now see inflation peaking “in the short term.”

Reporting by Jamie McGeever Editing by Nick Zieminski

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