Brazil’s consumer prices surged the most in three years last month, piling pressure on President Luiz Inácio Lula da Silva to ease shoppers’ pain.
Official data released Wednesday showed prices shot up 1.31 percent in February, the monthly biggest rise since March 2022, matching the median estimate of economists surveyed by Bloomberg. Annual inflation sped up to 5.06 percent.
Simmering inflation, particularly galloping food costs, is infuriating shoppers and spurring the government to search for a remedy. The Central Bank plans to deliver its third-straight interest rate hike of a full percentage point next week, dampening growth at time when Brazilians are fretting over the economy.
“Brazilian inflation picked up in February due to temporary and seasonal pressures. Barring a sharp currency appreciation or much faster economic slowdown, we expect price gains to come in above target throughout 2025. And with inflation expectations resilient, that’ll keep the Central Bank busy. We forecast a 100-basis-point interest-rate hike at next week’s meeting and further tightening over the second quarter before policymakers go on hold for the rest of the year," said Adriana Dupita, Bloomberg's Brazil and Argentina economist.
Housing costs jumped 4.44 percent on the month, pushed up by higher utility bills as energy credits expired, representing the main inflation driver in February. Education rose 4.7 percent, while food and beverage costs increased 0.7 percent, the statistics agency said.
Squeezed between elevated inflation and rates — with the benchmark Selic set to hit 14.25 percent — consumers are taking their frustration out on the leftist president who is known as Lula. A spate of recent opinion polls shows his approval ratings sinking to their lowest levels of his three terms in office.
The government has responded with measures that included slashing duties on imported food. Economists caution their impact is likely to be minimal, and that annual inflation will remain above the three percent target for the foreseeable future.
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by Andrew Rosati, Bloomberg
