Key facts
- Brazil's IPCA-15 consumer price index rose 0.06% in the month to mid-July.
- Annual inflation in Brazil slowed to 4.52% in the 12 months to mid-July.
- The monthly inflation rate was below all estimates in a Reuters poll of economists.
- Housing costs were the main driver of monthly price increases, while food and beverage prices declined.
- Brazil's central bank targets inflation at 3%, plus or minus 1.5 percentage points.
Brazil's consumer price index (IPCA-15) rose by 0.06% in the month to mid-July, a significant slowdown from the 0.41% increase recorded in the previous month and below economists' expectations. The annual inflation rate also eased to 4.52%, moving closer to the central bank's target range of 3% plus or minus 1.5 percentage points.
The slowdown in inflation comes ahead of the central bank's next interest rate decision, scheduled for August 4-5. Policymakers previously cut borrowing costs by 25 basis points to 14.25% in their last meeting, acknowledging a more challenging inflation outlook.
Central bank governor Gabriel Galipolo recently indicated that concerns about unanchored inflation expectations support maintaining restrictive monetary policy for an extended period, given the resilience of the labor market and economic activity in Latin America's largest economy.
Official data from IBGE indicated that the monthly price increase was primarily driven by higher housing costs, attributed to a jump in electricity bills. Conversely, prices for food and beverages saw a notable decrease of 0.66% during the period.