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Brazil's IPCA Inflation +0.15% In Dec Vs -0.21% In Nov

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01/11/2019 | 07:52am EDT

By Jeffrey T. Lewis

SAO PAULO--Consumer prices in Brazil rose in December at the slowest pace for the month since the real was introduced as Brazil's currency in 1994, helped by declining energy prices, according to the country's statistics agency.

Consumer prices rose 0.15% in the month, and increased 3.75% in December from a year earlier. In November, prices fell 0.21% in the month and rose 4.05% from a year earlier.

The figure for all of 2018, 3.75%, left Brazil's 12-month inflation below the center point of the central bank's target range for last year and for 2019. The bank has a goal to keep inflation within 1.5 percentage points of the center point, which in 2018 was 4.5% and this year was cut to 4.25%, for a target range of 2.75% to 5.75% in 2019. Next year the center point will drop again, to 4%.

The bank has kept its benchmark interest rate, the Selic, unchanged at the record low of 6.5% since March 2018, as inflation has remained within the target range. Slow economic growth and high unemployment have tamed demand and kept pressure off prices, and that situation looks set to continue, according to Gustavo Rangel, chief Latin America economist for ING.

"It's a very benign outlook for inflation in Brazil," he said.

Inflation is forecast to end 2019 at 4.01%, and the Selic will end the year at 7%, according to a survey of economists by the central bank.

In December, food prices had the biggest impact on the overall index, rising 0.44% in the month, with a 24.03% jump in the price of onions helping outweigh the 7.73% decline for some kinds of milk.

Energy prices declined in the month, with the cost of fuel down 4.25% and electric rates down 1.96% as rainy weather in October and November filled the country's reservoirs with water and boosted production of cheaper hydroelectric power.

Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com

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