Brazil's inflation rises to highest level in 7 years for mid-March

Consumers shop at a weekly street market in Rio de Janeiro, Brazil, September 2, 2021. REUTERS/Ricardo Moraes

BRASILIA (Reuters) – Inflation in Brazil grew more than expected in the month to mid-March, the biggest jump for that period in seven years, data showed on Friday, underscoring across-the-board price pressures despite aggressive monetary tightening led by the central bank.

Brazil’s official IPCA-15 consumer price index rose 0.95% in the month, down from 0.99% in February but above the median forecast in a Reuters poll of a 0.87% increase.

According to IBGE statistics agency, all nine groups of products and services surveyed recorded higher prices, especially food and beverages, which rose 1.95% over the previous month.

Inflation in the 12 months to mid-March climbed to 10.79%, also above the 10.69% projection in the poll.

That is far from the central bank’s year-end target of 3.5%, reflecting an already complex domestic inflationary dynamic that was further impacted by the surge in commodity prices after Russia’s invasion of Ukraine.

Brazil’s central bank chief Roberto Campos Neto said inflation should peak in April, stressing that the short-term figure will be a “little higher” than previously expected by policymakers.

Earlier this month, the central bank raised the country’s benchmark interest rate by 100 basis points to 11.75%, from a record-low of 2 last March, and signaled another hike of the same size in May. That could wrap up a rate hike cycle that should weigh on the economy this year.

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