MercoPress. South Atlantic News Agency

Brazilian inflation slows for third consecutive month

Brazilian January consumer inflation was 0.48% accumulating 5.84% in the last twelve months, slowing for a third consecutive months after having reached a three year high in October, according to the latest release from the country's statistics office.

The Brazilian central bank forecasts that the annual inflation rate will drop below the 4.5 % mid-point of its target by year- end, revealed the minutes of the January 20-21 monetary board meeting and published January 29. The central bank last month cut its benchmark interest rate by a full percentage point, the first reduction in 16 months and biggest in five years as the region largest economy comes to a standstill amid the global financial crisis. On January 21 the benchmark interest rate Selic was cut to 12.75%, from a two-year high of 13.75%. Analysts expect the bank to lower the Selic rate to 12% at their next meeting in March and to a record low 10.25% by July. In January food prices rose 0.75% up from 0.36% in December. Transport cots after falling 3% in December, rose 0.35% last month. Prices for food are being driven up on speculation a drought in southern Brazil will curtail output. Agriculture Minister Reinhold Stephanes said grain production may drop as much as 8% in 2009 from the previous year. "The price raises in January are not lasting ones, they are not demand-driven" pointed out the statistics office report.