TUESDAY, JUNE 3, 2014
SAO PAULO–Sao Paulo’s consumer price index eased in May to the lowest level since September 2013 as the impact of a drought on food prices receded in the period.
The CPI rose 0.25% in May compared with a gain of 0.53% in April, the Fipe research foundation said on Tuesday. The reading came in below market forecasts, which predicted increases of between 0.27% and 0.35%.
Food prices, which carry the greatest weighting in the index, rose 0.73% in May compared with an increase of 1.23% in April. Food costs in Brazil have increased in recent months as the country’s worst drought in decades pushed up the cost of fruits and vegetables, economists said.
In the meantime, transportation prices dropped 0.04% in May, versus a rise of 0.16% in April.
The CPI figures for Sao Paulo, Brazil’s largest city, reinforced the central bank’s view that inflation is likely to slow in the coming months.
Last week, the central bank decided to keep 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 stood 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.