Brazil: Inflation decelerates in March; provides further space for another rate cut
Consumer prices increased 0.07% over the prior month in March, down from the 0.25% uptick in February. The reading outstripped market expectations of a 0.15% rise and was largely due to lower prices for transportation; household items; and personal expenses.
Inflation fell to 3.3% in March from 4.0% in February, coming in below the Central Bank’s target of 4.0% for the end of 2020. Annual average inflation inched down to 3.7% from 3.8%.
Looking ahead, inflation is likely to ease further, particularly as the coronavirus outbreak deters economic activity, oil prices have been depressed, and despite the marked depreciation in the Brazilian real thus far this year. Contained inflationary pressures leave the door open for additional rate cuts by the Central Bank in its upcoming meeting on 5–6 May.