Down, down, down.

Inflation in Brazil fell to a near 10-year low last month as easing food costs and the recent strengthening of the real against the greenback helped push the pace of price increases below government target for the first time since August 2010.

Consumer prices – as measured by the IPCA index – fell to 4.08 per cent in the 12 months to the end of April, down from 4.57 per cent the previous month and a bigger drop than the 4.1 per cent the market had forecast.

The dip marks the first time inflation has come in below the central bank’s official mid-point target of 4.5 per cent and marks a startling turnaround from the 12-year high of 10.71 per cent recorded at the start of last year.

The remarkable drop in inflation is a rare victory for Brazil’s policymakers, and should pave the way for the central bank to further cut interest rates this year as the country looks to drag itself out of a deep recession and combat soaring unemployment.

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