Brazil’s mid-October inflation decelerates to two-year low

Brazilian mid-month inflation, measure by the IPCA-15 index, eased in October to 0.19 percent. It is lower than September’s rate of 0.23 percent. The 0.19 percent is the lowest IPCA-15 pace since 2009, when the index was at 0.18 percent, according to Brazil’s official statistical office.

Thus, the cumulative index in the year remained at 6.11 percent, quite lower than the 8.49 percent seen in the same period of 2015. The cumulative index in the past 12 months remained at 8.27 percent, lower than the 8.78 percent recorded in the prior 12 months.

Food and beverages prices dropped 0.25 percent in mid-October, as compared with the drop of 0.01 percent in mid-September. The drop in food and beverages prices was the biggest since August 2014.

On Wednesday, the Brazilian central bank cut its key interest rate for the first time in four years. The Copom unanimously decided to lower the Selic rate to 14 percent. The inflation expectations for next year collected by the Focus survey dropped to about 5 percent since the previous Copom meeting, whereas expectations for 2018 and longer horizons are already around that level.