Brazil’s inflation in the month through mid-September decelerated less than analysts estimated, as the central bank maintains interest rates at the highest level since 2006.
Inflation as measured by the IPCA-15 index slowed to 0.39 per cent from 0.43 per cent a month earlier, the national statistics agency said on its website Tuesday. That was above the median 0.38 per cent estimate from 39 analysts surveyed by Bloomberg. Annual inflation remained at 9.57 per cent.
Even as Brazil heads into what’s forecast to be the deepest recession in 25 years amid surging unemployment, inflation is currently more than twice the government’s target. The central bank this month kept its key rate unchanged at 14.25 per cent after seven straight increases, and signaled it had done enough to slow the pace of consumer price increases to 4.5 per cent by the end of 2016.
Prices for food and beverages fell 0.06 per cent after a 0.45 per cent increase the previous month. Transport costs rose 0.78 per cent after a drop of 0.46 per cent in the month through mid-July. Housing prices climbed 0.68 per cent.
Finance Minister Joaquim Levy last week announced a mix of tax increases and spending cuts after Standard & Poor’s on 9 September cut Brazil’s credit rating to junk. The proposed fiscal adjustment is part of government efforts to control inflation and create the basis for sustainable economic growth.
With the government pushing austerity objectives, Brazil’s economy is expected by analysts surveyed by the central bank to contract 2.7 per cent this year and 0.8 per cent in 2016, the first two-year slump since 1931.
The Brazilian real has weakened 40 per cent in the last 12 months, the worst performance among 16 major currencies tracked by Bloomberg, boosting inflation pressures through increased import costs.
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