Brazil's Monthly Inflation Registers Record Decline on Energy Tax Cuts

Brazil's consumer prices decreased more than expected in July, the country's statistics agency said on Tuesday, with the steepest drop ever on the benchmark IPCA index off the back of a string of anti-inflation measures by the government and central bank, Reuters reported. Prices in Latin America's largest economy fell by 0.68% last month, the IBGE statistics agency said. It was the lowest rate recorded since inflation measurements began in January 1980, IBGE said. The drop took inflation in the 12 months through July to 10.07%, down from an increase of 11.89% the previous month, though still far above the central bank's target of 3.5%, plus or minus 1.5 percentage point. IBGE research manager Pedro Kislanov said the decrease was mainly driven by a sharp fall in transportation costs, which dropped 4.51% following fuel tax cuts and as state-run oil company Petrobras cut gasoline prices at its refineries. Housing costs also fell 1.05% in the period, IBGE added, due to tax cuts as the same bill that lowered state tariffs levied on fuel provided a tax cut for electricity and communication services by including them on a list of "essential" services. Read more.