Introduction
Brazil's inflation rate has decreased more than anticipated in May, yet it remains significantly above the central bank's target range, as reported by the statistics agency IBGE.Context
According to IBGE, the consumer prices measured by the benchmark IPCA index rose by 0.26% in May and recorded an increase of 5.32% over the past 12 months. This rate fell short of economists' forecasts, which predicted a monthly rise of 0.33% and an annual increase of 5.40% based on a Reuters poll.Developments
The latest data indicates a decline from April's monthly inflation rate of 0.43% and the 12-month reading of 5.53%, although both figures significantly surpass the official inflation target of 3%, with a permissible variation of 1.5 percentage points.IBGE noted that two out of the nine groups surveyed experienced price reductions in May, with transport costs, including airfare and fuel, declining. Furthermore, the trend in food and beverage price increases, which are closely monitored, showed a monthly decline from 0.82% in April to 0.17% in May.
These inflation figures emerge ahead of the central bank's interest rate-setting meeting scheduled for June 17-18. Policymakers have committed to maintaining "flexibility and caution" after a recent increase in the benchmark interest rate by 50 basis points to 14.75% last month.