*Brazil’s national statistics institute (Ibge) has released the official consumer price index (Ipca) for June, showing a monthly inflation rate of 0.24% and an annual rate of 5.35%. This marks the fourth consecutive month to register a deceleration in monthly inflation, which fell from 0.26% the previous month, but the latest annual rate is up from 5.32% in May. Of the nine categories of products and services measured by the Ibge, only one registered monthly deflation – the food and drinks category (-0.18%). Since the start of this year, Brazil has had a continuous inflation target range of 3.0% +/-1.5. Annual inflation has been above the upper limit of this target range since October last year, but under the current inflation target system, the central bank (BCB) is obliged to provide an explanation after six consecutive months of inflation remaining outside the target range. In an open letter published yesterday, the BCB president Gabriel Galípolo listed several factors explaining why annual inflation has been above 4.50% from January-June, which included residual inflation from the preceding year and surprisingly high levels of economic activity. Galípolo expects annual inflation to fall below 4.50% by the end of the first quarter of 2026.
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