By Jeffrey T. Lewis
SÃO PAULO--Brazil's inflation slowed in April from March after fuel prices declined, outweighing an acceleration in food prices increases and higher costs for medicines.
Consumer prices rose 0.31% from March, the Brazilian Institute of Geography and Statistics, or IBGE, said Tuesday. Prices rose 6.76% from a year earlier. In March, prices rose 0.93% and increased 6.1% from a year earlier.
The slowdown in price increases in April comes as economists expect the 12-month figure to start to decline in coming months as jumps in fuel prices earlier in the year are partially reversed. Brazil's central bank reacted to rapidly rising prices by hiking its benchmark interest rate in March, from a record low of 2% to 2.75%, and it raised the rate again last month by another 75 basis points.
The bank said it would raise the rate by the same amount at its next meeting, in June, depending on the evolution of the economy and the outlook for inflation.
Food prices rose quickly in the final months of last year, as demand in China and higher commodities prices spurred exports from Brazil, but slowed at the start of this year. Now food price increases are accelerating again, once again because of high commodities prices on world markets.
"Mainly soybeans and corn are impacting producers' costs, and this ends up influencing the final price of the product on the market," said Pedro Kislanov, research director for the IBGE.
Food prices rose 0.4% in April from March, after an increase of 0.13% the previous month, with the cost of meat up 1.01% in the month and up 35.03% over 12 months, the IBGE said. The price of healthcare items, including medicines, rose 1.19% in the month after falling 0.02% in March.
Transportation prices fell 0.08% in April, after a rise of 3.81% in March, after the price of fuels fell 0.94%. Gasoline cost 0.44% less last month, the first decline in 10 months, and the price of alternative fuel ethanol fell 4.93% in the month.
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(END) Dow Jones Newswires