Brazil's consumer prices as measured by the benchmark IPCA index rose slightly less than expected in August, data from government statistics agency IBGE showed, cementing expectations the country's central bank will cut interest rates next week.
Prices were up 0.23% in the month, IBGE said in a statement, below market forecasts of 0.28%, as lower food prices offset the hike in energy and fuel prices.
That pushed the inflation rate from the last 12 months to 4.61%, up from 3.99% in the previous month, but below the 4.67% expected by economists polled by Reuters. The figure is within the central bank's 1.75%-4.75% inflation target range for this year.
Brazil's central bank kicked off a monetary easing cycle last month with a half-percentage point cut to its benchmark rate, which it had held at a six-year high of 13.75% for nearly a year in a bid to tame high inflation. It will issue its next interest rate decision on Sept. 20.
The data "reinforces the recent positive dynamics of inflation in the country and the central bank's flight plan in the cycle of interest rate cuts," said Joao Savignon, head of macroeconomic research at Kinitro Capital.
Out of the nine categories surveyed by IBGE, housing had the greatest impact on the index, boosted by a 4.59% rise in residential electricity prices, as a one-off discount from the Itaipu hydroelectric plant ended.
Gasoline prices climbed 1.24% in the month, following a hike in fuel prices by state-run oil firm Petrobras PETR4.SA in mid-August.
Food And Beverage Prices Down
"We've seen falls over the last few months in some important household consumption items, such as beef and chicken, which is related to supply issues," as availability of the products is higher, Andre Almeida, IBGE's survey manager, said in a statement.