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Brazil Inflation June 2023

Brazil: Inflation recedes to near three-year low in June

Inflation dropped to 3.2% in June from May’s 3.9%. June’s result marked the lowest inflation rate since September 2020. While June’s result slightly overshot market expectations, the reading came in below the Central Bank of Brazil (BCB)’s 2023 target of 3.25%.

Looking at the details of the release, the moderation chiefly reflected prices for food and non-alcoholic beverages growing at a softer pace. Meanwhile, prices for transport declined at a steeper pace. These developments more than offset prices for housing and utilities rising at a brisker rate.

Accordingly, the trend pointed down, with annual average inflation falling to 5.9% in June (May: 6.6%).

Lastly, consumer prices dropped a seasonally adjusted 0.08% in June over the previous month, contrasting May’s 0.23% increase. June’s result marked the steepest fall in prices since September 2022 but was more mild than expectations of a 0.10% fall.

June’s deceleration enabled a start to the BCB’s monetary policy loosening cycle at its meeting on 1–2 August. Inflation in the coming months should increase from current low levels, however, partly on a high base of comparison.

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