June 25, 2020 / 12:46 PM / 15 days ago

UPDATE 1-Brazil mid-June annual inflation falls to 20-year low of 1.9%

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By Jamie McGeever

BRASILIA, June 25 (Reuters) - Annual inflation in Brazil fell in June to its lowest in at least 20 years, according to a mid-month measure of consumer prices on Thursday, although not quite as low as expected as prices remained virtually unchanged on a monthly basis.

The 1.9% annual rate of IPCA-15 consumer price inflation is the lowest since the series began 20 years ago, Refinitiv data showed, suggesting that inflation will significantly undershoot the central bank’s target of 4.0% this year.

The monthly rate of Brazil’s IPCA-15 consumer price inflation in the month to mid-June was 0.02%, following a record low -0.59% the month before, statistics agency IBGE said. That was the weakest figure for any month of June since 2006.

Both the annual and monthly rates were slightly higher than the median forecasts in a Reuters poll of economists of 1.85% and -0.08%, respectively.

The accumulated rate of inflation so far this year is 0.37%, IBGE said.

Of the nine groups of goods and services surveyed, five registered outright deflation in June from the month before, IBGE said, including transport costs, which fell 0.7% on the month. Air fares were again the biggest driver, falling 26%.

However, food and drink prices rose 0.47% over the month, and household goods prices rose 1.36%, IBGE said.

The economy is expected to register its steepest annual downturn this year since records began in 1900, and a combination of unemployment and slumping demand is depressing inflation.

Market consensus, according to the central bank’s latest weekly survey of economists, is for inflation to end this year at 1.6%. The central bank’s own projections, using a mix of interest and exchange rate variables is around 2% or just below.

Reporting by Jamie McGeever Editing by Nick Zieminski

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