Brazil's mid-month inflation index posts 1st drop in 2 years in August

Brazil's mid-month consumer price index posted its first drop in two years in August as electricity costs fell, official data showed on Tuesday, with the 12-month reading edging closer to the upper end of the central bank's target range.

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Prices in Latin America’s largest economy fell 0.14 per cent in the month to mid-August, statistics agency IBGE said, down from a 0.33 per cent increase in the previous month. Economists polled by Reuters expected a 0.19 percent drop.

The monthly decline was the first for the IPCA-15 index since July 2093, and comes as interest rates stand at a nearly 20-year high as part of the central bank's bid to tame persistent inflation.

The overall price drop was mainly driven by lower housing costs, with electricity costs decreasing sharply due to a one-off discount related to hydroelectric dam Itaipu’s results, according to IBGE.

Closely watched food and beverage prices also slipped in the month, alongside declines in transport and communication costs.