SAO PAULO (Reuters) – Brazil’s consumer prices were in deflationary territory for the third month in a row in September, data from government statistics agency IBGE showed on Tuesday, still benefiting from major tax cuts on fuels and electricity ahead of a presidential election runoff.
The benchmark IPCA index fell 0.29% last month, IBGE said, a smaller drop than the 0.34% forecast by economists polled by Reuters and slowing down from the 0.36% fall seen within the previous month.
The buyer price drops got here on the back of an aggressive monetary tightening cycle by the country’s central bank and state tax cuts aimed toward lowering high energy prices, which had been hurting President Jair Bolsonaro’s popularity as he runs for re-election.
Latin America’s largest economy also benefited from moves by state-run oil firm Petrobras to chop refinery gate fuel costs within the period.
The transportation sector once more led consumer prices down in Brazil in September, posting a 1.98% drop, while food and beverage prices fell for the primary time since November 2021, IBGE said.
The statistics agency also noted, nevertheless, that five of the nine groups surveyed didn’t post monthly decreases, signaling that some pressures remain as costs rose in groups akin to housing, apparel and private expenses last month.
Within the 12 months through September, inflation reached 7.17%, down from 8.73% within the previous month though barely above the 7.1% forecast.
Annual inflation still stays well above the central bank’s goal of three.5%, with a tolerance margin of 1.5 percentage points on either side.
Last month, the bank decided to pause its aggressive monetary tightening after 12 consecutive rate of interest hikes, keeping the benchmark rate at 13.75% on improving inflation expectations.
William Jackson, chief emerging markets economist at Capital Economics, said the newest inflation plunge confirmed that the tightening cycle has ended.
“But with some goods and services inflation still rising, and the headline rate far above goal, a shift towards rate of interest cuts stays a great distance off,” he added.
(Reporting by Gabriel Araujo; Editing by Steven Grattan and Alistair Bell)
Copyright 2022 Thomson Reuters.
