The benchmark IPCA index, rose 0.6% last month, above market forecasts, government statistics agency IBGE said on Thursday.
Prices rose 6.5% in the 12 months through October, down from an increase of 7.2% in the previous month.
The modest month-to-month gain in October was driven by eight of the nine components, particularly food, healthcare, and transportation and fuel.
Food prices rose 0.7% from the previous month, driven mostly by increased prices for food consumed at home. Healthcare costs rose 1.2% due to higher prices for personal hygiene goods and health plans.
Transport prices rose by 0.6%, but this followed massive drops in the previous three months due to tax cuts. Prices in most of the other sub-indices advanced at a slower pace compared with their recent trends.
“Overall, rapid disinflation continues, thanks to the lagged effect of tighter monetary policy, and the measures implemented by the government to bring key prices down. The impact of these measures is gradually fading, but the key point is that core inflation is still heading south, despite a relatively resilient labour market, and recent fiscal support to households,” said Andres Abadia, chief Latin America economist at Pantheon Macroeconomics.
Abadia expects domestic demand to soften over the coming months, keeping core inflation on a downward path.
(Reporting by Steven Grattan; editing by Jonathan Oatis)
By Steven Grattan
