Brazil's Inflation Rate Falls to Lowest Since March

Brazil's mid-month inflation rate fell to the lowest since March, stoking speculation the central bank will slow the pace of interest-rate increases., 9/24/2008 5:49:47 AM

Consumer price increases as measured by the benchmark IPCA- 15 index slowed for a third consecutive month to 0.26 percent, from 0.35 percent by mid-August, the national statistics agency said today on its Web site. The increase was more than a 0.23 percent median forecast in a Bloomberg survey of 31 analysts.

Falling commodity prices and slower global economic growth may help lower inflation that has been above the 4.5 percent government target since January, the central bank said in the minutes of its Sept. 9-10 meeting. Annual inflation eased to 6.2 percent in mid-September from 6.23 percent a month earlier.

Four central bank rate increases since April have failed to cool domestic demand that fueled a bigger-than-expected 6.1 percent annual expansion in second-quarter gross domestic product. Growth of retail sales accelerated in July to 11 percent from an 8.2 percent gain in June.

Policy makers led by central bank President Henrique Meirelles voted 5-3 to raise the so-called Selic rate to 13.75 percent from 13 percent at their most recent meeting. The dissenters voted to raise the rate by a half-point to 13.5 percent.