Brazil consumer prices accelerate in August, but rate cuts seen
Inflation in Brazilian accelerated in August due to a run-up in costs for hotel accommodation linked to the Olympic Games but was expected to fall back going forward, possibly clearing the way for the central bank toe ease policy as soon as October, according to some economists.
The country's main consumer price gauge, the IPCA, increased at a 0.4% month-on-month pace and by 9.0% year-on-year, up from 8.7% in the month before, as expected by consensus.
Consumer prices rose at a 0.5% month-on-month pace in July.
Prices for hotel rooms rose by 1.0% over the month but would reverse in the following month, Pantheon Macroeconomics's senior international economist Andres Abadia said in a research report sent to clients.
Core inflation on the other hand is still high, but Abadia believed the "rapid deterioration" in the country's job market this year would see disinflation gather pace in the fourth quarter of 2016.
"This will allow the central bank to ease in October, providing inflation expectations remain under control. The good news is that the recent upside surprises on headline inflation—due mainly to food prices—have not prevented inflation expectations for 2017 from falling already," Abadia said.