(Reuters) – Brazil’s inflation slowed in April but still posted the steepest rise for the month in 26 years, pushing the 12-month figure to over 12% amid continued pressures on food and fuel, official figures showed on Wednesday.
Consumer prices as measured by the benchmark IPCA index rose 1.06% in April, slightly above the 1.0% increase forecast by economists in a Reuters poll, but lower than the 1.62% increase seen in March.
According to the statistics agency IBGE, the monthly result was again driven by the rise in food and beverages (+2.06%), and transport (+1.91%), groups that have been impacted by skyrocketing commodities and disrupted supply chains in the wake of the Russia-Ukraine war.
Eight of the nine groups surveyed showed increases in April, reinforcing the spread of inflation in Latin America’s largest economy. Only expenditures with housing fell (-1.14%) due to cheaper energy tariffs.
In the 12 months through April, prices were up 12.13%, against 12.07% expected in the poll, and higher than the 11.3% print seen through March.
That is even further from this year’s official target of 3.5%.
Deteriorating inflation has made economists worsen their outlooks not only for 2022, but also for next year, which led the central bank to signal a likely interest hike in June, after already raising rates to 12.75% from a 2% record low in March 2021. read more
The latest figures point to a broad-based increase in price pressures, said William Jackson, Chief Emerging Markets Economist at Capital Economics, who expects additional 75 basis points of hikes over the coming months, to 13.5%.
Felipe Oliveira, an economist at MAG Investimentos, said that inflation should slow down due to cheaper electricity and a lower increase in food prices from June, the harvest season.
But he pointed out that gasoline is about 20% below international prices, with possible adjustments helping to keep inflation high, “although below the rates observed in recent months”.