By Gabriel Burin<\/p>\n
(Reuters) – Brazil’s consumer price index is forecast to have dropped 0.15% in August against July thanks to a special discount in electricity bills and benign trends in food costs, a Reuters poll showed.<\/p>\n
While potential headline deflation could support expectations of monetary policy easing ahead, some components probably remained sticky, warranting more central bank caution.<\/p>\n
The IPCA consumer price index likely fell 0.15% last month over July, according to the median estimate of 22 economists polled September 3-8. Official data is due on Wednesday.<\/p>\n
Technical deflation was last seen in August 2024, with a marginal 0.02% fall. Before that, the IPCA had receded 0.08% in June 2023.<\/p>\n
On a 12-month basis, August inflation is forecast at 5.09%, which would be the slowest rate since 5.06% in February but still above the central bank’s target of 3% plus a tolerance margin of 1.5 percentage points.<\/p>\n
Electricity costs declined sharply last month due to a one-off discount related to hydroelectric dam Itaipu’s results, as reported previously in official mid-month data.<\/p>\n
“August inflation was marked by the decline in food prices… (and) well-behaved industrial prices,” said Fernanda Guardado, Latin America chief economist at BNP Paribas.<\/p>\n
Cost pressures in both sectors have calmed this year as a result of the strong appreciation of Brazil’s real currency after a spell of volatility at the end of 2024.<\/p>\n
“The impact from the bonus of Itaipu, which led to a decline in electricity fares, also pushed the number into negative territory, and is expected to subside by the turn of the month,” Guardado said.<\/p>\n
“Meanwhile, services inflation continues to run well above target, around 6% annual rate,” she added, citing a component whose stickiness has been a matter of concern for Banco Central do Brasil (BCB).<\/p>\n
This is generally attributed to a resilient labor market. In the three months through June, Brazil’s jobless rate fell to the lowest level for the current data series from 2012.<\/p>\n
Additionally, slow convergence of expectations towards BCB’s target has been another main reason behind its strict policy stance.<\/p>\n
The central bank last month held the benchmark Selic rate steady at 15% after a 450 basis-point tightening campaign launched a year ago.<\/p>\n
Most analysts predict it will kick off an easing cycle in the near future, but weaker-than-forecast disinflation has pushed back the expected start of rate cuts to next year from the second half of 2025.<\/p>\n
(Reporting and polling by Gabriel Burin; Editing by Alexandra Hudson)<\/p>\n","protected":false},"excerpt":{"rendered":"By Gabriel Burin (Reuters) – Brazil’s consumer price index is forecast to have dropped 0.15% in August against…\n","protected":false},"author":2,"featured_media":125460,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[9548,84,20083,1294,45048,59466,59465,56,54,55],"class_list":{"0":"post-125459","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-brazil","9":"tag-business","10":"tag-consumer-price-index","11":"tag-economy","12":"tag-electricity-bills","13":"tag-fernanda-guardado","14":"tag-ipca","15":"tag-uk","16":"tag-united-kingdom","17":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/125459","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=125459"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/125459\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/125460"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=125459"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=125459"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=125459"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}