April 5, 2017 / 6:28 PM / 9 months ago

Brazil annual inflation seen approaching target in March

BRASILIA (Reuters) - Brazil’s annual inflation rate is likely to hit a 6-1/2 year low and approach the government target, helped by easing food costs and moderating increases in the price of imports as the Brazilian currency strengthens, a Reuters poll showed on Wednesday.

Consumer prices were seen rising 4.57 percent in the 12 months through March, down from 4.76 percent in the previous month, according to the median of 22 estimates that ranged between 4.52 and 4.63 percent. BRCPIY=ECI

That inflation rate would be lowest since August 2010. The government targets inflation at 4.5 percent.

Last Thursday, Brazil’s central bank said that lower inflation could allow it to step up its pace of interest rate cuts and help pull the economy out of its worst recession on record.

Consumer prices were seen increasing 0.25 percent in March from February, slowing from a 0.33 percent rise in the previous month, according to the median of 25 forecasts of between 0.20 and 0.30 percent. BRCPI=ECI

The data will be published by the national statistics bureau IBGE on Friday at 9 a.m. local time (1200 GMT).

Food prices have fallen in recent months, driven by good expectations for this year’s harvests.

A more than 5 percent increase in the value of the Brazilian real BRL= this year against the dollar has slowed the rise in the price of imports for consumers, particularly in manufactured goods.

In a central bank survey released on Monday, economists forecast annual inflation would fall from nearly 11 percent in early 2016 to 4.1 percent by the end of the year.

Accordingly, the central bank is expected to cut its benchmark interest rate from the current 12.25 percent to 8.75 percent this year.

Reporting by Silvio Cascione Editing by W Simon

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