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ECONOMY | 13-05-2023 09:00

Brazil inflation slowed again in April to 4.18%

Brazil's annual inflation rate fell for the 10th straight month in April, to 4.18%.

Brazil's annual inflation rate fell for the 10th straight month in April, to 4.18 percent, the national statistics institute said Friday, bolstering President Luiz Inácio Lula da Silva's push for growth-spurring interest-rate cuts.

The rate, which was within the Central Bank's target range for the second straight month, was down from 4.65 percent the previous month, hitting its lowest level since October 2020 when it stood at 3.92 percent, according to figures from national statistics institute IBGE.

The monthly inflation rate came in at 0.61 percent, down from 0.71 percent in March, IBGE said.

That was higher than the average forecast of 0.55 percent by 46 specialists polled by business daily Valor Econômico.

But analysts said the latest figures added to evidence the Central Bank's hawkish inflation-fighting campaign was working.

"The sharp fall in Brazilian inflation... was encouragingly broad based" across the different categories of goods surveyed, notably food prices, said William Jackson, chief emerging markets economist at consulting firm Capital Economics.

However, he cautioned that did not mean the central bank would start interest-rate cuts just yet.

"We think the Central Bank will want to see more evidence that core price pressures are easing," he wrote in a note.

Lula, who took office in January, has called Brazil's benchmark interest rate "absurd" at 13.75 percent, saying it is stunting the growth of Latin America's biggest economy.

The veteran leftist's administration fears a recession, after Brazil's sluggish economy contracted 0.2 percent in the fourth quarter of 2022 – the last under ex-president Jair Bolsonaro.

But the Central Bank's monetary policy committee has showed no signs of easing off its hawkish stance yet, despite the inflation rate returning within its target range (1.75-4.75 percent) in March.

The committee ended its last meeting on May 3 holding the key rate for the sixth straight time and calling for "patience."



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