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Brazil's Inflation Cools To 0.09% In October, Easing Pressure But Not Mission Accomplished
(MENAFN- The Rio Times) Brazil's official inflation gauge (IPCA) rose just 0.09% in October, the softest October reading since 1998 and a sharp deceleration from September's 0.48%.
The slowdown nudged the 12-month rate to 4.68%, a touch below market expectations but still above the Central Bank's 3% target, which allows a tolerance band up to 4.5%.
The mechanics of the cooldown were straightforward. Housing costs fell as residential electricity got cheaper after a shift in tariff flags, taking some heat out of monthly bills.
Food prices were broadly flat, with declines in staples offset by gains in a few volatile items. Transport edged higher on airfares and pockets of fuel pressure, while apparel and health-related items posted modest increases.
Regionally, the picture was mixed: some capitals benefited more from cheaper power and fuel, others less so. For households, the immediate takeaway is relief at the margin-especially on utilities.
For businesses, the message is steadier: inflation is heading in the right direction, but not yet within the comfort zone that would justify a rapid pivot in borrowing costs.
Central Bank holds course as inflation cools
The Central Bank has signaled it will prioritize credibility and persistence over quick wins, a stance that favors predictable, rules-based policy and disciplined public finances.
That matters beyond the monthly headline. Inflation that settles closer to target lowers the economy's“noise,” improves planning horizons, and helps widen access to longer-term credit.
It also strengthens the case for micro-reforms-competition in energy and transport, simpler taxes, and leaner state intervention-to keep supply-side pressures in check rather than leaning on price controls or fiscal shortcuts.
Bottom line: October's benign print is good news, driven largely by cheaper electricity and subdued food. But with the 12-month rate still above the upper bound of the target band, Brazil needs a few more months of similar restraint-and continued policy discipline-before declaring victory.
The slowdown nudged the 12-month rate to 4.68%, a touch below market expectations but still above the Central Bank's 3% target, which allows a tolerance band up to 4.5%.
The mechanics of the cooldown were straightforward. Housing costs fell as residential electricity got cheaper after a shift in tariff flags, taking some heat out of monthly bills.
Food prices were broadly flat, with declines in staples offset by gains in a few volatile items. Transport edged higher on airfares and pockets of fuel pressure, while apparel and health-related items posted modest increases.
Regionally, the picture was mixed: some capitals benefited more from cheaper power and fuel, others less so. For households, the immediate takeaway is relief at the margin-especially on utilities.
For businesses, the message is steadier: inflation is heading in the right direction, but not yet within the comfort zone that would justify a rapid pivot in borrowing costs.
Central Bank holds course as inflation cools
The Central Bank has signaled it will prioritize credibility and persistence over quick wins, a stance that favors predictable, rules-based policy and disciplined public finances.
That matters beyond the monthly headline. Inflation that settles closer to target lowers the economy's“noise,” improves planning horizons, and helps widen access to longer-term credit.
It also strengthens the case for micro-reforms-competition in energy and transport, simpler taxes, and leaner state intervention-to keep supply-side pressures in check rather than leaning on price controls or fiscal shortcuts.
Bottom line: October's benign print is good news, driven largely by cheaper electricity and subdued food. But with the 12-month rate still above the upper bound of the target band, Brazil needs a few more months of similar restraint-and continued policy discipline-before declaring victory.
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