Brazil Fipe: Sao Paulo CPI Increases 0.22% for 4 Weeks Ended June 7

SAO PAULO–The consumer price index for Sao Paulo, Brazil’s biggest city, eased in the four weeks ended June 7, to the lowest level since September, as food price gains continued to moderate.

The CPI rose 0.22% in the period, compared with a rise of 0.25% in May, the country’s Fipe research foundation said Tuesday. It was the lowest level since the four weeks ended September 23, when the index increased 0.20%.

The reading was in line with market forecasts, which ranged between increases of 0.16% and 0.23%.

Food prices, which carry the greatest weighting in the index, picked up 0.45% in the four weeks ended June 7, compared with an increase of 0.73% in May. Gains in food prices have slowed in recent weeks, after country’s worst drought in decades pushed up prices of fruits and vegetables in the first few months of the year.

Transport costs fell 0.13% in the period, versus a 0.04% drop in May.

The CPI reading for Sao Paulo reinforced the central bank’s view that inflation was likely to slow in the coming months. At the end of May, the central bank kept its benchmark Selic interest rate unchanged at 11%, ending a year-long cycle of rate increases. It was the first time the bank hadn’t raised the rate since early 2013, when the Selic was at a historic low of 7.25%. In recent public remarks, central bank officials have said that the full impact of higher borrowing costs on inflation is yet to be felt.