SAO PAULO--Brazil consumer prices fell in August amid a decline in the cost of food and weak demand from the country's sluggish economy.
The inflation rate declined 0.09% in August, after an increase of 0.33% in July, the Brazilian Institute of Geography and Statistics said Thursday. Prices rose 4.19% in August from a year earlier, the IBGE said.
Brazil's gross domestic product expanded only 0.2% in the second quarter, as a 10-day truckers strike at the end of May closed highways and prevented deliveries of food, medicine and other products around the country. Weak growth, and a slow decline in unemployment, mean there's little demand to push prices higher, according to Cristiano Oliveira, an economist at Banco Fibra in Sao Paulo.
"There's still a lot of idle capacity in the economy, and not enough demand," to create inflationary pressure, he said.
Shortages caused by the strike pushed prices, especially for food, higher during May and into June. That trend has now reversed itself and food prices fell 0.34% in August and decreased 0.08% from a year earlier, according to the IBGE.
The outlook through the end of the year is for inflation to remain low, which should allow Brazil's central bank to keep interest rates unchanged into 2019, Mr. Oliveira said.
The bank lowered its benchmark Selic rate to a record low of 6.5% in March, the last cut in a 17-month loosening cycle.
