Brazil’s mid-March inflation slows more than all forecasts

Bloomberg

Brazil’s inflation slowed more than all analysts forecast in the month through mid-March as joblessness rises and the economy heads toward its second straight year of contraction.
Inflation as measured by the IPCA-15 index decelerated to 0.43 percent from 1.42 percent a month earlier, the national statistics agency said on Wednesday. That compares with the median estimate from 37 analysts surveyed by Bloomberg for a 0.54 percent increase in consumer prices. Annual inflation slowed for the first time in 16 months, to 9.95 percent from 10.84 percent.
Inflation’s return to single-digits was anticipated by Brazil’s central bank as the recession continues to bite into demand. With the currency strengthening and political strife weighing on the outlook for an economic turnaround, economists have pared their forecasts for consumer price increases in 2016. Yet inflation is expected to exceed the ceiling of the central bank’s target range for the second straight year even as the job market deteriorates.
Unemployment rose to 8.2 percent in February, from 7.6 percent the prior month, the statistics institute said in a separate report.
Swap rates on the contract due in January 2017 fell 3 basis points to 13.68 percent in early-morning trading. The real lost 1.1 percent to 3.6207 per U.S. dollar, after having strengthened the most among 16 major currencies this month.
Prices for food and beverages increased 0.77 percent, less than half the 1.92 percent pace in the month through mid-February, the statistics agency said. Transport prices rose 0.45 percent, less than one-third the pace of the prior month. Education prices rose 0.67 percent after a 5.91 percent jump associated with tuition adjustments at the start of the year.
Central bank President Alexandre Tombini has said repeatedly that policy makers foresee inflation easing in the first half of the year as a recession diminishes
demand.