Brazil Annual Inflation Dives Below Floor of Target Range

(Bloomberg) --

Brazil’s annual inflation fell below the floor of the central bank’s target range in mid-October, giving policy makers more leeway to press ahead with borrowing cost cuts.

Twelve-month inflation eased to 2.72%, the lowest since mid-May 2018 and below the 2.75% floor of the central bank’s target range this year, the national statistics agency reported on Tuesday. The IPCA-15 index rose 0.09% from mid-September, above the 0.03% median estimate from economists in a Bloomberg survey.

Key Insights

• Food and beverage costs fell 0.25% in the third straight monthly decline that represented the most significant drag on the index
• The central bank had indicated that annual inflation will slide below 3% before picking up slightly at the end of the year
• Policy makers are expected to cut the benchmark interest rate by a half-point at its third straight meeting this month as consumer price expectations remain below target through 2021

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• Three of 10 categories recorded consumer price drops from mid-September, according to the statistics agency
• Transportation prices rose 0.35% on the month as gasoline costs increased by 0.76%
• Housing costs declined by 0.23%

To contact the reporter on this story: Mario Sergio Lima in Brasilia Newsroom at mlima11@bloomberg.net

To contact the editors responsible for this story: Juan Pablo Spinetto at jspinetto@bloomberg.net, ;Walter Brandimarte at wbrandimarte@bloomberg.net, Matthew Malinowski

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