Rio, 7/9/2003 (Agência Brasil - ABr) - The Broad Consumer Price Index (IPCA), which the government uses to gauge its inflation targets, showed deflation in June for the first time since November 1998. The June IPCA was down 0.15%, compared to an increase of 0.61% in May. In June 2002, the IPCA rose 0.42%.

According to the Brazilian Institute of Geography and Statistics (IBGE), which conducts the IPCA, deflation was due to a fall in food and fuel prices. Gasoline prices fell 4.94%, and alcohol prices were down 12.14%. Food prices fell 0.34%, because of the harvest, highlighted by tomatoes (down 25%), onions (down 21%), carrots (down 16%).

Non-food prices fell 0.09%, compared to an increase of 0.60% in May. The biggest price spike in June was clothing, up 1.89% (because of the arrival of the winter collection).

Biggest deflation occurred in Brasilia, where prices fell 0.71%. The biggest price increase was in Salvador, where they rose 0.36%. In São Paulo, there was deflation of 0.15%, and in Rio de Janeiro, 0.03%.

In the first half of the year, there has been a cumulative rise of the IPCA of 6.64%, compared to 2.94% for the same period in 2002. For the last 12 months, the cumulative rise has been 16.57%, compared to 17.24% for the same period a year ago. (AB)