Brazil’s Inflation Accelerates to 5.06% in February
Inflation in Brazil rose to 5.06% year-over-year in February, half a percentage point higher than in January, reaching its highest level since September 2023, according to data released Wednesday.
The national consumer price index surged 1.31% in February, up from 0.16% in January, marking the sharpest February increase since 2003, according to IBGE.
The monthly spike was primarily driven by a 16.80% increase in residential electricity costs, as reported by Brazil’s statistics office. Meanwhile, food price inflation—a major concern for President Lula da Silva—eased slightly, slowing from 0.96% in January to 0.70% in February.
Central Bank May Cut Interest Rates
The annual inflation rate broke a two-month streak of consecutive declines, moving further away from the central bank’s target ceiling of 4.5% for this year. The price surge contrasts with Brazil’s slowing economy, which grew just 0.2% in the last quarter of 2024 compared to the previous three months.
This economic slowdown is partly attributed to the central bank’s cycle of interest rate hikes aimed at curbing inflation. Currently, the benchmark interest rate stands at 13.25% per year, and the central bank is expected to raise it by one percentage point next Wednesday due to persistent inflation, fiscal concerns, and global uncertainty.
Financial markets anticipate interest rates will end 2025 at 15% annually. Nevertheless, forecasts suggest that Brazil’s inflation rate will close the year at 5.68%. In 2024, Latin America’s largest economy recorded an inflation rate of 4.83%, surpassing the 4.62% registered in 2023.
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