SAO PAULO, July 28 (Reuters) – Brazil’s IPCA-15 consumer price index rose far less than expected in the month to mid-July, official data showed on Tuesday, with the 12-month inflation rate moving closer to central bank’s target range ahead of its next interest rate decision.
Consumer prices were up 0.06% in the period, statistics agency IBGE said, slowing from 0.41% in the previous month and coming in below all estimates in a Reuters poll of economists, whose median forecast was for a 0.20% rise.
Annual inflation came in at 4.52%, down from 4.80% a month earlier, while markets had expected a reading of 4.67%.
Brazil’s central bank targets inflation at 3%, plus or minus 1.5 percentage points. Its interest rate-setting committee will meet again on August 4-5.
Last month, policymakers cut borrowing costs for a third straight meeting by 25 basis points, to 14.25%, and left their next steps open while acknowledging a more challenging inflation outlook.
Central bank governor Gabriel Galipolo said last week that concerns about unanchored inflation expectations support keeping monetary policy restrictive for longer, with the labor market and activity still resilient in Latin America’s largest economy.
In the month to mid-July, IBGE said, prices were driven mainly by higher housing costs due to a jump in electricity bills. Meanwhile, closely watched food and beverage prices fell 0.66% in the period.
(Reporting by Gabriel Araujo, Editing by Louise Heavens)
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