Brazil's Inflation Rate Drops to Lowest in a Year


Brazil's monthly inflation rate dropped in September to the lowest in a year as food prices fell for a second month.

Consumer price increases, as measured by the benchmark IPCA index, slowed to 0.26 percent in September, down from 0.28 percent in the previous month, the fourth straight monthly decline. Still, the increase in September was more than the 0.20 percent median forecast in a Bloomberg survey of 34 economists.

Central bank policy makers last month signaled they're ready to slow the pace of interest rate increases, saying declining commodity prices and slower world economic growth will help brake inflation in Brazil.

The bank on Sept. 10 raised the so-called Selic rate for a fourth straight time since April. In a 5-3 vote, policy makers elected to raise the rate to 13.75 percent from 13 percent. The three dissenters voted for 13.5 percent.

Economists covering Brazil's economy forecast that the bank will increase the benchmark rate to 14.25 percent at their Oct. 28-29 meeting, according to an Oct. 3 central bank survey.

Food prices fell 0.27 percent in September, the second straight month of food deflation. In August, food prices fell 0.18 percent.


TradingEconomics.com, Bloomberg
10/8/2008 7:27:59 AM