Brazil inflation speeds up in mid-November, more rate hikes loom
2024.11.26 08:40
SAO PAULO (Reuters) – Brazil’s consumer prices rose more than expected in the month to mid-November, data from statistics agency IBGE showed on Tuesday, further fueling bets that the central bank will keep hiking interest rates.
Prices as measured by the benchmark IPCA-15 index were up 0.62% in the period, IBGE said, while annual inflation reached 4.77%, speeding up from 4.47% a month earlier and above the upper end of the central bank’s 1.5% to 4.5% target range.
Economists polled by Reuters had forecast the monthly rate to come in at 0.48%, while the 12-month figure was expected at 4.62%.
The latest figures come as markets eagerly await the announcement of a government fiscal package with spending cut measures, and ahead of the central bank’s final interest rate decision of 2024.
The monetary authority earlier this month accelerated its tightening with a 50-basis-point interest rate hike to 11.25%, leaving the door open for further increases while underscoring the need for fiscal discipline to counter inflation.
The bank’s board is scheduled to announce its next policy decision on Dec. 11.
The mid-November inflation figure was fueled by higher food and beverage prices, IBGE said, noting they have now risen for three consecutive months, as meat prices jumped. Transportation costs were also up, driven by a 22.5% rise in air ticket prices.
Capital Economics economist Jason Tuvey said the figures mean the central bank is likely to raise interest rates further than previously expected. He now forecasts the benchmark rate to peak at 13% in the first half of 2025, up from 12% before.
“But a lot rests on the details of the government’s proposed spending cuts. Failure to soothe investors’ fears about the state of the public finances could prompt even more aggressive hikes,” Tuvey added.
