Brazil's October inflation reading looks benign at first glance, but the details point the other way. Monthly inflation fell to 0.14% from 0.82% in September, yet the 12-month IPCA index rose from 4.58% to 4.63%. That leaves it above the 4.5% ceiling of the target band for the second month running. Under Brazil's continuous inflation target, the Central Bank formally misses its goal only after six consecutive months above the ceiling.
The slowdown rests on volatile items that tend to reverse. Most of October's drop came from three of them:
