Inflation slowed in June and returned to the government’s target after two years

The data published this Wednesday by the National Institute of Statistics (INE), show that the Consumer Price Index (CPI) registered a negative monthly variation of -0.46% in the seventh month of the year.

The data was lower than what was expected by the market for the month (0.28%), according to the latest survey by the Central Bank (BCU).

Thus, in the rolling year ending in June, inflation slowed down sharply, going from 7.1% to 5.98%. So inflation was within the ceiling of the target range set by the authorities (between 3% and 6%).

This has not happened since May 2021when inflation had been 6.64%, and the range was then between 3% and 7%.

In June, the drop in fruit and vegetable prices stands out again. These products had had a strong boost in the first months of the year as a result of the drought, with increases of between 40% and 50%.

Core inflation -excludes fruits and vegetables, and fuels- it also entered the target range and is the lowest since at least 2012, according to economist Nicolas Cichevski.

This new data is known on the day prior to the meeting of the BCU Monetary Policy Committee (Copom). Market expectations point to the monetary authority cutting the interest rate by 25 basis points, to 11%. For this year, it expects a cut of 100 basis points that would place it at 10.5%.

This is also a signal that the export sector has demanded, in a context of sharp decline in the dollar locally and globally.

In June

Last month, the items with the highest incidence in the CPI were food and non-alcoholic beverages (-0.35), housing (0.05) and transportation (-0.17).

the item food and non-alcoholic beverages fell 1.3%. The fall in prices in fruits of 7.4%with decrease in bananas (-5.5%), lemons (-27.7%), oranges (-21%), mandarins (-5.3%), apples (-1.1%) and fresh strawberries ( -31.5%).

For his part, vegetables and legumes 8.4% became cheaper. The drop in the prices of lettuce (-18.6%), bell peppers (-17%), tomatoes (-24%), Creole squash, squash and kabutiá (-6.7%), carrots (-23.2%) stands out. %), potatoes (-5.6%) and sweet potatoes (-8.1%).

Meanwhile, the price of meat and other products fell 0.24%, oil (-2.8%) and milk, other dairy products and eggs rose 0.25%.

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