Friday August 7, 02:11 PM
UPDATE 1-Brazil inflation slows more than expected in July
SAO PAULO, Aug 7 (Reuters) - Inflation in Brazil slowed more than expected in July because of a decline in food and beverage costs, underscoring expectations of a benign outlook for consumer prices.
The benchmark IPCA consumer price index rose 0.24 percent in July, slowing from a 0.36 percent increase in June, statistics agency IBGE said on Friday.
The index was expected to climb 0.28 percent last month, according to the median forecast of 35 economists surveyed by Reuters. Estimates ranged from 0.23 percent to 0.31 percent.
The central bank, which uses the IPCA index as a guide when setting interest rates, has a 4.5 percent annual inflation target for 2009 and 2010, with a tolerance band of plus-or-minus 2 percentage points.
In the 12 months to July the index rose 4.5 percent, down from the 4.8 percent increase in the year to June and little changed from 4.47 percent in the year though mid-July.
The bank last month cut the benchmark Selic interest rate by 50 basis points to a record low of 8.75 percent and signaled it might keep borrowing costs on hold for a while, citing a benign outlook for inflation in the coming months. Analysts said the decision showed policymakers will likely keep the Selic unchanged through the end of 2010.
Five of the nine price categories of the IPCA index slowed their advance or fell in July, as compared with June. Food and beverage prices dropped 0.06 percent, compared with a 0.7 percent gain in June, while clothing costs fell 0.01 percent in July after climbing 0.53 percent the previous month.
For more details on the IPCA report for July, see: http://www.ibge.gov.br/home/presidencia/noticias/noticia_visualiza.php?id_noticia=1430&id_pagina=1
(Reporting by Elzio Barreto and Rodrigo Viga Gaier; Editing by Padraic Cassidy) Keywords: BRAZIL ECONOMY/INFLATION
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