| BRASILIA, April 27
BRASILIA, April 27 Strong crop harvests pushed
down wholesale prices in Brazil in April, according to a survey
on Thursday, a strong sign that the country's inflation rate
should fall well below the government's target in coming months.
The IGP-M price index, which measures both producer and
consumer prices, fell 1.1 percent in April, think
tank Getulio Vargas Foundation (FGV) said.
This was the fastest monthly decline of the IGP-M index in
26 years, mostly due to a steep decline in the wholesale prices
of grains such as soybeans and corn, FGV added.
The IGP-M index, widely used in Brazil as a benchmark for
annual contract revisions, rose 3.37 percent in the 12 months
Soy and corn prices slumped as farmers expect record crops
this year, helped by favorable weather. Wholesale agricultural
prices fell 4.3 percent in April from March, according to the
Producer prices of manufactured goods such as apparel and
electronics dropped 0.85 percent from March.
Falling wholesale prices in Brazil should reduce consumer
inflation further in coming months, after it slowed from 10.7
percent in January 2016 to 4.6 percent in March.
Lower inflation should in turn keep the door wide open for
the central bank to continue slashing interest rates from 14.25
percent last year to an expected 8.5 percent by December,
according a market survey.
"Inflation should fall as low as 3.2 percent by August,"
said Fabio Romão, an economist with consultancy LCA.
The official inflation target is 4.5 percent.
On top of lowering inflation, the bumper harvests are
expected to have boosted Brazil's economic growth in the first
quarter, ending the country's worst recession ever. They have
also contributed to record trade surpluses.
Economists in a Reuters poll expected a 1.0 percent decline
in the monthly rate, according to the median of 22 forecasts.
(Reporting by Silvio Cascione; Editing by David Gregorio)