By Rogerio Jelmayer

SAO PAULO--Brazil's general price index, known as the IGP-M, saw a smaller increase in 2016, in a sign that inflationary pressures across Latin America's largest nation are slowing, providing room for more interest-rate cuts by the central bank.

The IGP-M figure increased 7.17% this year, versus a rise of 10.54% in 2015, private think tank Getulio Vargas Foundation said Thursday.

The IGP-M measures inflation adjusted for annual rental contracts of housing and commercial properties across Brazil.

In December, the IGP-M index rose 0.54%, compared with a drop of 0.03% in November. The December IGP-M figure measured prices from Nov. 21 to Dec. 20.

The December figure was in line with analysts' expectations for anincrease of between 0.33% and 0.60%.

Inflation is one of the challenges confronting Brazil's government as it grapples with the weak economy. Gross domestic product is expected to contract 3.5% this year, according to country's finance ministry.

Last month, the Brazilian central bank reduced its Selic base rate to 13.75% from 14%. Economists expect the bank to continue its cycle of reduction in the coming months.

Write to Rogerio Jelmayer at rogerio.jelmayer@wsj.com

(END) Dow Jones Newswires

December 29, 2016 05:55 ET (10:55 GMT)

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