Brazilian inflation slows in February
Brazil's national index of consumer prices (IPCA) slowed in February and brought some good news to the struggling economy.
Inflation was 0.90% last month compared to 1.27% in January and 1.22% in February 2015, according to statistics bureau IBGE.
The previous rates were higher due to higher gasoline prices and February inflation decelerated because of smaller increases in food and beverage prices.
In the last 12 months, the IPCA lost steam for the first time after four increases, slowing to 10.36% in February after hitting 10.71% in January.
The new inflation figures were slightly below expectations from economists consulted by Bloomberg, who forecasted an average 0.98% inflation in February and a 12-month rate of 10.44%.
"The lagged pass-through from BRL [local currency] depreciation, pass-through (second-round effects) from the large shock to administered prices to freely determined prices, inertia, and formal and informal indexation mechanisms are likely to keep inflation under significant pressure in 2016 despite the projected severe contraction in real GDP," Goldman Sachs analyst Alberto Ramos said in a release.
These factors make it highly likely that 2016 will mark the second year in a row that inflation exceeds the 6.50% upper limit of the central bank's inflation target band, according to Ramos.
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