SAO PAULO (Reuters) - A smaller-than-expected rise in Brazil’s consumer prices in mid-August pushed inflation to a new 18-year low, keeping the central bank on track to cut interest rates aggressively.

FILE PHOTO: Consumers shop at a supermarket in Sao Paulo, Brazil January 11, 2017. REUTERS/Paulo Whitaker/File Photo

The IPCA-15 consumer price index BRIPCA=ECI rose 2.68 percent in the 12 months through mid-August, below the 2.73 percent expected in a Reuters poll and down from 2.78 percent in mid-July, statistics agency IBGE said on Wednesday.

The reading is far below the bottom end of the central bank’s annual target range of 4.5 percent plus or minus 1.5 percentage points, supporting bets of a sharp rate cut at the central bank’s September meeting.

Food and beverage prices slipped 0.7 percent, extending a string of drops driven by a strong agricultural harvest and leading economists at JPMorgan to cut their estimates for year-end inflation to 3.5 percent from 3.9 percent.

But disinflation was widespread, thanks to a slower-than-expected economic recovery and double-digit unemployment. So-called core inflation, which strips the price index of volatile food prices, came in below the bottom-end of the target range at 3.4 percent.

UBS economists revised their forecast and now expect the central bank in September to reduce rates by 100 basis points from 75 basis points previously, aligning with the growing market consensus. It would be the fourth 100-basis point cut that the bank has made.

Yields paid on interest-rate futures <0#2DIJ:> fell.

“Inflation will allow the BCB to keep the current Selic easing pace,” they wrote in a report.

Slowing inflation in Brazil parallels weakening price pressures in developed economies, where tepid global economic growth has kept central banks on edge.

Brazilian consumer prices gained 0.35 percent in the month to mid-August due to a one-off increase in fuel taxes, as well as a regulatory decision to raise power rates as scarcer rains sapped hydroelectric generation. Economists expected a 0.40 percent monthly increase.

Below is the result for each price category:

(monthly percent change) Mid-August Mid-July

- Food and beverages -0.65 -0.55

- Housing 1.01 0.24

- Household articles 0.21 -0.55

- Apparel -0.29 0.04

- Transport 1.35 -0.64

- Health and personal care 0.73 0.14

- Personal expenses 0.34 0.31

- Education 0.19 0.08

- Communication -0.32 0.00

- IPCA-15 0.35 -0.18