By Pierre Frontini
SAO PAULO (Reuters) – Brazilian customers fell 0. 36 percent in August, marking a straight month of deflation with fuelarray declining, government statistics firm IBGE said on Friday.
The monthly figure measured through the benchmark HICP index showed a smaller drop than market forecasts of a 0. 39% drop, according to economists polled through Reuters.
In the 12 months to August, costs increased by 8. 73%, well below the 10. 07% observed in the last 12 months.
Three of the nine teams surveyed recorded a negative reading in August, with the largest decline coming from the transportation category, which fell 3. 37% over the period, while fuel costs fell 10. 82%.
Last month, state oil company Petrobras cut gas costs at the refinery by 4. 9 percent, making the fuel the biggest negative effect on the HICP index. [nL1N2ZR14X]
Services inflation slowed to 0. 28% in the month from 0. 80% in July, basically affected by a 12% drop in airfare prices.
The improved numbers would likely imply that the end of the financial tightening is in sight, analysts say the central bank may also have another interest rate hike up its sleeve.
“The central bank’s aggressive comments this week show our view that there will be a final 25 basis point increase in interest rates (to 14. 00%) in the adjustment cycle,” said William Jackson, lead emerging markets economist at Capital Economics.
Earlier this week, Brazil’s central bank leader Roberto Campos Neto said policymakers were focusing on financial easing right now, as the priority remains to bring inflation to the official 3. 5 percent target.
(Reporting through Peter Frontini; Editing via Steven Grattan and Jonathan Oatis)
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