Brazil’s consumer prices slowed in December, leaving annual headline inflation below the central bank’s target band for the second consecutive year.

Annual consumer price inflation — as measured by the IPCA index — topped 3.75 per cent in for the whole of last year, according to figures released on Friday by the IBGE, the country’s statistics agency. This is higher than the 2.95 per cent reported in 2017, but still way under the inflation target of Brazil’s monetary authority of 4.5 per cent plus or minus 1.5 percentage points.

On a month-to-month basis, Brazilian consumer prices rose 0.15 per cent in December, compared to the 0.21 per cent slippage recorded in November. This was the slowest rate recorded for the month of December since the implementation of inflation-busting Plano Real in 1994.

Low inflation in a country with an infamous history of runaway prices has prompted policymakers to maintain interest rates at an all-time low. Last month, the central bank kept the benchmark Selic rate at 6.50 per cent, as widely expected.

Economists forecast the new central bank governor, Roberto Campos Neto, would try to leave the policy rate unchanged for now.

“The inflation environment remains very comfortable,” wrote Alberto Ramos of Goldman Sachs, adding that, assuming a well anchored Brazilian Real, such low “inflation should also give the central bank near-term comfort.”


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