Brazil likely recorded moderate deflation in June on a monthly basis, indicating a possible start to the monetary easing cycle that global investors are waiting for next month, a Reuters poll showed.
The probable drop, which will be confirmed in Tuesday’s statement, will be the first since September last month, in a brief period of falling consumer prices that stopped after the election of the new Brazilian President in October.
An inflation cool-off would catch global attention as a forerunner of future trends in other major economies, which could allow the Brazilian central bank to abandon a hawkish approach of the kind that the US Federal Reserve is still pursuing.
Consumer prices as measured by the IPCA index probably fell by 0.10% in June compared to May, according to the average estimate of 13 economists polled from July 5 to 7.
On an annualized basis, inflation is expected to slow further to 3.20%, the lowest level since September 2020.
The inflation rate in Brazil continues to improve slowly, with the market consensus pointing to 4.98% in 2023, according to the central bank survey, down from 5.36% at the beginning of this year.
Last week, the Brazilian government set an inflation target of 3% for 2026, in line with targets for 2024 and 2025.
