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Petroleo Brasileiro Petrobras : Brazilian Consumer Prices Declined in November as Fuel Cost Fell

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12/07/2018 | 12:47 pm


By Jeffrey T. Lewis





SAO PAULO--Brazilian consumer prices declined in November from October as the stronger currency and lower cost for a barrel of oil reduced the price of fuels.



The inflation rate declined 0.21% in the month, after rising 0.45% in October, statistics agency IBGE said Friday. Prices rose 4.05% in the 12 months through November, a slower pace than the 4.56% increase in the year through October.



The Brazilian real started to get stronger against the dollar in mid-September, when right-wing presidential candidate Jair Bolsonaro began to lead in polls ahead of the October elections. Mr. Bolsonaro ran on a market-friendly platform, with his economic advisers calling for reforms to the country's deficit-bloating pension system.



The real lost some ground against the dollar in November, but remained stronger than it had been in mid-September and declining oil prices allowed Brazilian oil company Petroleo Brasileiro SA, or Petrobras, cut the price of fuels at its refineries last month.



The outlook for inflation is now so good that some economists, including Andre Perfeito, at Sao Paulo-based brokerage Spinelli, say the central bank should be able to keep its benchmark Selic interest rate at the current record-low level of 6.5% for longer than previously expected.



"We think the Selic can stay unchanged throughout 2019," Mr. Perfeito said.



Most economists are nevertheless less optimistic than Mr. Perfeito. The central bank's weekly survey of economists shows the median forecast for the Selic at the end of next year at 7.75%.



Prices declined in five of the nine categories broken down by the IBGE. Transport prices, which includes fuel, fell the most, by 0.74% in the month, followed by housing and by health care, which both declined 0.71%. Clothing prices fell 0.43% and communications prices declined 0.07%.





Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com





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