Brazil inflation falls to 2.89%, lowest since May last year Brazil inflation falls to 2.89%, lowest since May last year

BRASILIA (Reuters) - Brazilian consumer price inflation fell to its lowest in more than a year in September, official figures on Wednesday showed, a reading below the central bank's target that is likely to strengthen expectations of another cut in interest rates.

The benchmark IPCA index of inflation rose 2.89% in the 12 months through September, down from an increase of 3.43% in the previous month, government statistics agency IBGE said on Wednesday.

This was below the median consensus forecast of 2.97% in a Reuters poll of economists and marked the first time since May last year that the annual rate of inflation has been below 3.0%.

The central bank's official year-end goal for 2019 remains 4.25%, a target most economists think will be undershot. In the first nine months of the year, the annual rate of inflation was running at 2.49%, IBGE said.

On a monthly basis, prices fell in September for the first time this year, slipping 0.04%. This is only the fourth month of consumer price deflation in the last five years, IBGE figures show.

The biggest weight in September's data was a 0.43% month-on-month fall in food and drink prices, IBGE said, followed by a 0.76% decline in the cost of household goods. Communications was the only other category that saw a fall in prices, albeit a slender 0.01%.

Of the remaining six categories, the biggest driver was a 0.58% increase in the cost of health and personal care items, IBGE said.

Citing low inflation, Brazil's central bank reduced benchmark borrowing costs last month to a new low of 5.50%. Economists widely expect it to cut again later this year.

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