SAO PAULO (Reuters) -Consumer prices in Brazil rose slightly more than expected in their mid-March reading but 12-month inflation still slowed to its lowest level since the middle of last year, data from statistics agency IBGE showed on Tuesday.
Prices in Latin America's largest economy were up 0.36% in the month to mid-March, IBGE said, down from 0.78% in the previous month but slightly above the 0.32% expected by economists polled by Reuters.
That took annual inflation down to 4.14% from 4.49% in the month before, with the IPCA-15 inflation index hitting its lowest level since last July despite also overshooting the median market forecast of 4.10%.
Five of the nine groups surveyed posted price increases in the period, IBGE said, with a 0.91% rise in food and beverage costs representing the biggest impact on the index. Prices of household goods, on the other hand, dropped 0.58%.
"Overall, the dynamics in both the headline and core IPCA-15 continue to show that underlying inflation is under control, despite the overshoot driven by increased food prices on bad weather conditions," Pantheon Macroeconomics' chief economist for Latin America, Andres Abadia, said in a note to clients.
"We still expect inflation to continue to fall slowly this year, as fresh food prices start to normalize," added Abadia, who believes the scenario will allow Brazil's central bank to maintain its current pace of monetary easing in the near term.
The central bank this month cut its benchmark interest rate by 50 basis points for the sixth consecutive meeting to 10.75%, but signaled that discussions on more modest cuts in the future emerged within its rate-setting committee.
It reiterated that Brazil's interest rate and its respective path will be "those necessary to bring inflation back to its target," which in 2024 stands at 3%, plus or minus 1.5 percentage points.
Highpar economist Maykon Douglas said the latest inflation reading did not "bring additional stress" to the current scenario, as services inflation came in line with expectations despite some upward surprises related to a tight job market.