Producer prices in Brazil fall to the lowest in almost two years

SAO PAULO, July 4 (Reuters) - Brazil's producer price index (PPI) fell 1.29% in May, reaching the lowest level since 2023, statistics agency IBGE said on Friday.

Producer prices in May contracted from a 0.12% drop in the previous month, IBGE said in a statement, marking the sharpest fall this year and the biggest decline since a 2.72% drop in June 2023. May's data also marks a fourth straight month in the negative.

May saw a downward trend across most of the industry, according to IBGE, which added that so-called intermediate goods - products used in production such as iron ore and sugar - were the main driver in May.

IBGE's producer price index manager Murilo Alvim noted that lower commodity prices had contributed, resulting a lower cost of production, while a stronger Brazilian real had also helped reduce costs in some sectors for goods traded in U.S. dollars.

Since the start of 2025, producer prices in Latin America's largest economy shrank 1.97%, while in the accumulated reading for the 12 months through May hit 5.78%.

Brazil's central bank targets inflation at 3% plus or minus 1.5 percentage points.

Despite slowing down more than expected in May, inflation in the country still remains at 5.32% in the 12 months through May, IBGE data showed.

Even as prices have dipped, Brazil's central bank last month hiked its benchmark interest rate to 15% - its highest level in almost 20 years. (Reporting by Isabel Teles; Editing by Sarah Morland)