Official inflation is the lowest for January since 2009.
Boosted by lower transportation prices, Brazilian inflation began the year slowing down in January to 0,55% and saw a sharp easing in the 12-month accumulated rate, reaching its lowest level in just over a year; the index is the lowest recorded for the month since 2009.
RIO DE JANEIRO, Feb 7 (Reuters) - Boosted by transportation prices, Brazilian inflation began the year slowing down in January to 0,55 percent and saw a sharp easing in the 12-month accumulated rate to its lowest level in just over a year.
The figures released this Friday by the Brazilian Institute of Geography and Statistics (IBGE), better than expected, showed a 5,59 percent increase in the National Consumer Price Index over 12 months, after the IPCA ended 2013 with a 5,91 percent increase.
Although still at a high level, this is the lowest reading in this comparison since November 2012, when the IPCA reached 5,53 percent. The government's official target is 4,5 percent for the IPCA, with a margin of 2 percentage points above or below.
The results fell short of expectations in a Reuters poll, whose median forecasts pointed to a 0,62 percent increase in January compared to December and a 5,67 percent increase year-on-year.
According to IBGE, the main contributor to the January result compared to the previous month was the Transportation group, with a negative variation of 0,03 percent compared to an increase of 1,85 percent in December. The group's impact in January was -0,01 percentage points, while in December it had been +0,35 points.
The main reason for this slowdown was the 15,88 percent drop in airfare prices, after rising 20,13 percent in December. This, coupled with fuel prices, saw their increase slow to 0,77 percent in January compared to 4,12 percent in the previous month.
The biggest price drop, however, was in Clothing items, which fell 0,15 percent in January due to market promotions, following a 0,80 percent increase in December and an impact of -0,01 points.
These results offset the increase in Food and Beverages, which, at 0,21 percentage points, represented the largest weight on the month's index.
According to IBGE, the IPCA for January already incorporates the metropolitan region of Vitória (ES) and the municipality of Campo Grande (MS), in the indicator's new methodology.
The persistence of high inflation levels ultimately led the Central Bank to raise the Selic rate to 10,50 percent at the beginning of the year, maintaining the tightening pace at 0,50 percentage points. The next meeting of the Monetary Policy Committee will take place on February 25 and 26.
(Reporting by Felipe Pontes and Jeb Blount)