December 7, 2018 / 11:35 AM / 5 days ago

UPDATE 1-Brazil consumer prices slip more than expected in November

 (Recasts throughout)
    By Bruno Federowski
    BRASILIA, Dec 7 (Reuters) - Brazilian consumer prices fell
more than expected in November below the midpoint of the central
bank's targets for both 2018 and 2019, suggesting the bank
should be in no rush to lift interest rates from record lows.
    The benchmark IPCA index fell 0.21 percent from October,
government statistics agency IBGE said on Friday, compared to
the median estimate in a Reuters poll of economists for a 0.10
percent decline.            
    It was the first decline since August, when the
normalization of supply chains in the aftermath of a nationwide
truckers' strike drove prices lower across the board, and the
largest since June 2017.
    The annual inflation rate slipped to 4.05 percent from 4.39
percent in mid-November and 4.56 percent at the end of October,
IBGE said. Economists expected a 4.19 percent rate, the Reuters
survey showed.             
    The central bank targets a 4.5 percent year-end rate for
2018 and 4.25 per cent for 2019, plus or minus 1.5 percentage
points.
    While non-recurring drops in categories such as power and
fuel costs accounted for much of the slowdown, underlying price
pressures also remain muted as double-digit unemployment keeps a
lid on wage gains.
    This would reinforce a perception that the central bank can
take its time before hiking, maintaining support for the slow
economic recovery.
    The bank in October kept the benchmark Selic interest rate
at 6.50 percent for a fifth straight meeting and said upward
risks to inflation have eased. In the minutes of that encounter,
policymakers said inflation, currently at "appropriate levels,"
was likely to peak in the second quarter of 2019 before easing
towards its target.
    
Below is the result for each price category: 
                              November     October   
- Food and beverages          0.39         0.59     
- Housing                    -0.71         0.14      
- Household articles          0.48         0.76     
- Apparel                    -0.43         0.33     
- Transport                  -0.74         0.92     
- Health and personal care   -0.71         0.27     
- Personal expenses           0.36         0.25     
- Education                   0.04         0.04     
- Communication              -0.07         0.02     
- IPCA                       -0.21         0.45         

 (Reporting by Bruno Federowski
Editing by Peter Graff)
  
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