Brazil prices fall for first time since ’06
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.