Cheaper food dampens Brazil’s inflation in November

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Good news for Brazilians preparing those Christmas and New Year’s feasts: cheaper prices for beans and other food staples helped push inflation down again in November, the government said Friday. Inflation rose just 0.28 percent in the month, down from a 0.42 percent hike in October, the IBGE statistics office said. A poll of market analysts by Valor daily had expected a 0.35 percent rise.

The seventh consecutive fall in prices for food, down 0.38 percent in November, led the way in suppressing the overall index. Over the 12 months through November, the official IPCA price index rose 2.8 percent. Brazil is coming out of a long period of recession and strong inflation. The rapid fall in price rises has allowed the Central Bank to slash interest rates, cut to a record low of seven percent on Wednesday, or about half of what the key Selic rate was a year ago.

The 2.5 percent rise in the IPCA from January through November compared to 5.97 percent during the same 11 month period in 2016. The market consensus is for inflation to end the year at 3.03 percent. That’s right at the bottom end of the central bank’s three to six percentage target range, with 4.5 percent being the official bullseye. This compares drastically with 10.67 percent inflation in 2015 and 6.29 percent in 2016.

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