Brazilâ€™s consumer inflation slowed more than expected in February as a prolonged recession eats into Braziliansâ€™ purchasing power.
The benchmark IPCA consumer price index rose 0.9 percent from the previous month, following a 1.27 percent jump in January.
That was lower than the median forecast for a 0.98 percent increase from 43 economists surveyed by Bloomberg. Twelve-month inflation slowed for the first time since September, to 10.36 percent.
The central bank held borrowing costs unchanged earlier this month, anticipating that annual inflation would peak in the beginning of the year and then start to slow.
Still, price increases remain in the double-digits, routing confidence and throwing a wrench into consumer spending, Brazilâ€™s growth engine.
The economy is mired in recession and the governmentâ€™s agenda to restart activity has been undermined by impeachment proceedings and corruption scandals.
Swap rates on the contract due January 2017 fell 17 basis points to 13.88 percent in early-morning trading. The real strengthened 0.4 percent to 3.74 per U.S. dollar.
Central bank directors held the Selic rate unchanged for the fifth straight monetary policy meeting earlier this month. Speaking in late-February, central bank President Alexandre Tombini said the economyâ€™s weak performance creates a disinflationary force.
Brazilâ€™s GDP fell 1.4 percent in the fourth quarter, capping a year in which the economy as a whole shrank 3.8 percent â€” its worst performance in 25 years. Consumer spending, which accounts for nearly two-thirds of demand, fell 4 percent in the period.
The statistics institute chalked up that decline to higher inflation, interest rates and joblessness, as well as less credit and