Brazil notched its lowest annual inflation rate since 1998 last year, official data showed Wednesday, though an unexpected pickup in December could derail hopes for further interest-rate cuts by the central bank.
The IPCA consumer price index rose 0.44% in December from the previous month, bringing the 12-month inflation rate to 2.95%, the Brazilian Institute of Geography and Statistics, or IBGE, said Wednesday. That was the second-lowest rate since at least 1980, when the IPCA started.
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Though inflation fell short of the Brazilian central bank's 3% to 6% target range for 2017, consumer prices rose much faster than expected in the final month of the year. Analysts surveyed by the local Agencia Estado newswire had forecast that the IPCA would rise by just 0.3% in December from November.
That could muddle widespread expectations among investors for additional reductions to the central bank's baseline Selic interest rate at upcoming monetary policy meetings in February and March. The Selic currently stands at a record low 7% due to the aggressive easing cycle that followed Brazil's 2015-16 recession.
Fueling the rise in consumer prices last month was a sharp pick-up in food and beverage prices, which were on the decline for most of the year due to global factors.
Services such as education, health care and housing, meanwhile, all rose by more than 6% last year.
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(END) Dow Jones Newswires
January 10, 2018 06:57 ET (11:57 GMT)