Brazil's monthly inflation stood at 0.16pc in January, the lowest increase for the month since 1994 when the government enacted multiple measures to contain soaring inflation, according to government statistics agency IBGE.
The consumer price index (CPI) slowed annually to 4.56pc from 4.83pc in December, heavily influenced by a 14.2pc tumble in power costs in January, compared with a 3.19pc drop in December.
Power costs decelerated January's inflation by 0.55 percentage points — the major individual contributor to the annual drop, according to IBGE — thanks to a R1.3bn ($224mn) federal discount in power tariffs that month, CPI's manager Fernando Goncalves said.
Food and beverage costs rose by an annual 7.25pc, decelerating from 7.69pc in December.
Beef costs increased annually by almost 21.2pc following a 20.8pc gain in the month prior, while soybean oil costs decelerated to 24.55pc over the last 12 months from 29.2pc in December.
Motor fuels prices rose by 11.35pc in January. Ethanol was responsible for the group's largest annual increase of 21.59pc, up from 17.58pc in the month prior. Gasoline and diesel prices also registered annual rises of 10.71pc and 2.66pc from 9.71pc and 0.66pc, respectively.
Still, diesel prices remained at a 0.97pc monthly increase from December, while ethanol costs contracted by 1.82pc from 1.92pc and gasoline prices increased by 0.61pc from 0.54pc.
Fuel prices are likely to keep increasing in February, as states increased the VAT-like ICMS tax on fuels and state-controlled Petrobras increased wholesale diesel prices by 6.3pc, both effective as of 1 February.
Transportation costs rose by 1.3pc in January over the year, following a 0.67pc gain in December. Flight tickets were the most responsible for the increase, with a 10.42pc monthly gain from a 22.2pc contraction in December.
Brazil's central bank is targeting CPI of 3pc with a margin of 1.5 percentage point above or below.
The bank raised its target rate to 13.25pc in January after it failed to maintain Brazil's headline inflation under the ceiling of 4.5pc for 2024. Further increases are expected in the coming months, the bank said.
The central bank has recently changed the way it tracks the inflation goal. Instead of tracking inflation on a calendar year basis, it will now monitor the goal on a 12-month basis.
In 1994, Brazil enacted its Plano Real, a series of measures to stabilize the economy and detain soaring inflation, which had hit an annual 916pc by the end of that year. One of the measures was to change its currency to the real from the cruzeiro real.
