Brazil prices fall for first time since ’06

Kuwait Times - - BUSINESS -

RIO DE JANEIRO: Brazil­ian con­sumer prices fell last month for the first time in more than a decade, a po­ten­tial boost for Pres­i­dent Michel Te­mer as he faces bribery charges. The in­fla­tion rate turned neg­a­tive, with con­sumer prices con­tract­ing by 0.23 per­cent in June com­pared to May, the state statis­tics in­sti­tute IBGE said. That was the first over­all price drop since 2006, and fol­lowed a steady monthly de­cline in in­fla­tion this year.

The trend has raised hopes that Latin Amer­ica’s big­gest economy is emerg­ing from the worst re­ces­sion in its his­tory. The cen­tral bank has been cut­ting in­ter­est rates for sev­eral months to spur eco­nomic ac­tiv­ity. An­a­lysts said Fri­day’s data may prompt it to speed up rate cuts. June’s fall was driven by lower food, hous­ing and trans­port prices, the in­sti­tute said.

Brazil­ian in­fla­tion had hit 10.67 per­cent at the end of 2015 and 6.29 per­cent last year. An­a­lyst Alex Agos­tini of con­sul­tancy Austin Rat­ing said Fri­day’s data gave a mixed sig­nal about the coun­try’s eco­nomic health. He judged it good news for the prospect of lower in­ter­est rates but cau­tioned it was also “bad news in that it re­in­forces the sense of lethargy in the economy.” Te­mer, a con­ser­va­tive, has launched aus­ter­ity re­forms that he says will strengthen pub­lic fi­nances and the economy. But he now risks be­ing put on trial on bribery charges.

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