Lower inflation raises pressure on Central Bank

Fish market in Belém. Food prices weigh the most on Brazil's inflation index. Photo: Arnika Ganten/Shutterstock

Brazilian consumer prices aren’t climbing as quickly as they once were. The IPCA benchmark index rose by 0.23 percent in May — below market expectations for the month and a steep drop from April inflation (0.61 percent).

In the 12 months to May, prices climbed by 3.94 percent, a rate that has decelerated in each of the past 11 months.

The latest data strengthens analysts’ belief that the Central Bank will probably start cutting the country’s benchmark interest rate, the Selic, from its current levels of 13.75 percent, by the third quarter of this year.

“The bank will not make a policy about-face in June,” economist André Perfeito told followers in his Telegram channel. “But I expect to see [the bank’s policy meeting minutes] bringing clear signals that monetary easing...

Fabiane Ziolla Menezes

Former editor-in-chief of LABS (Latin America Business Stories), Fabiane has more than 15 years of experience reporting on business, finance, innovation, and cities in Brazil. The latter recently took her back to the classroom and made her a Master in Urban Management from PUCPR. At TBR, she keeps an eye on economic policy, game-changing businesses, and people driving innovation in Latin America.