May 09, 2014, 08:43:00 AM

RIO DE JANEIRO–Prices in Brazil continued to creep higher in April, but inflation slowed substantially from the previous month, likely keeping alive expectations that the central bank’s recent cycle of interest-rate increases will come to an end.

Brazil’s consumer-price index, or IPCA, rose 0.67% in April, compared with a 0.92% rise in March, the Brazilian Institute of Geography and Statistics, or IBGE, said Friday. A Wall Street Journal poll of 14 economists had produced a median estimate that last month’s inflation would stand at 0.81%.

Prices of foods and beverages, after increasing at a torrid 1.92% pace in March, rose by a more manageable 1.19% last month as staples like tomatoes and cassava came down. A severe drought in Brazil this year hit an array of crops, though Finance Minister Guido Mantega said recently he thinks the effects would be passing.

Despite the slowdown in price increases last month, local authorities face an uphill battle in bringing inflation below the 6.5% upper limit of the Central Bank of Brazil’s tolerance band for the end of the year. The running, 12-month inflation rate through the end of April rose to 6.28% from 6.15% in March.

To avoid going over the central bank’s limit by the end of the year, the IPCA must not rise by less than 0.455% per month on average. Price increases haven’t been that slow in Brazil since September.

Still, the lower-than-expected figure for the month could allow the central bank to hold off on additional increases to its baseline Selic interest rate at the next meeting, scheduled for May 27-28. The monetary authority has raised rates nine times over the past year, bringing the Selic to 11% currently from 7.25% in early 2013.

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