Annual inflation in Latin America’s largest economy slowed to 3.16% in June from 3.94% in May, in line with a market consensus of 3.17%. Prices fell 0.08% on a month-on-month basis, the first deflation registered since September of last year.
The figures are likely to support expectations that the central bank will start cutting rates as soon as next month, after it took a dovish tone at its last meeting in June, saying that an August cut was possible if the positive inflation scenario continued.
The Brazilian monetary authority has conducted one of the world’s most aggressive tightening cycles since early 2021 in a bid to tame high inflation, with rates at a six-year high of 13.75% since August 2022.
The 0.08% consumer price fall from May to June was driven mainly by lower food, beverage and transportation costs and was also in line with market expectations.
Annual inflation is currently within this year’s target range of 1.75%-4.75%, although an uptick is expected from July because of unfavorable base effects.
Source: Economy - investing.com
