Brazil’s consumer prices surged 1.31% in February, the highest since March 2022, pushing annual inflation to 5.06%. This is exerting pressure on President Lula da Silva, as the Central Bank is expected to raise interest rates. Housing and education costs rose sharply, while government measures to reduce imported food duties may have limited impact.
Brazil’s consumer prices experienced a notable increase last month, marking the largest rise in three years. Official data, released on Wednesday, indicated a monthly price jump of 1.31 percent in February, aligning with economists’ expectations surveyed by Bloomberg. The annual inflation rate also rose to 5.06 percent, exacerbating financial strains on shoppers and intensifying pressure on President Luiz Inácio Lula da Silva to address these issues.
The inflation is being driven primarily by escalating food prices, which has led the government to urgently seek remedies. The Central Bank is poised to implement its third consecutive interest rate hike of one percentage point next week, a move that is expected to dampen economic growth as consumers express increasing concern regarding the state of the economy.
Adriana Dupita, an economist for Bloomberg focused on Brazil and Argentina, stated, “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.” She anticipates a 100-basis-point interest-rate hike at next week’s meeting, with further tightening later in the second quarter.
Housing costs saw a significant ascent of 4.44 percent for the month, largely attributed to rising utility expenses following the expiration of energy credits, which were the primary contributors to inflation in February. Other notable increases include a 4.7 percent rise in education costs and a 0.7 percent increase in food and beverage prices.
Amidst the dual pressure of high inflation and a rising Selic rate projected to reach 14.25 percent, consumers are voicing discontent with President Lula, leading to a decline in his approval ratings to their lowest levels across his three terms in office. The government has implemented measures such as reducing duties on imported food, although many economists believe these actions will have minimal effect, with annual inflation likely remaining above the three percent target.
In summary, Brazil is facing a significant rise in consumer prices, reaching the highest inflation levels since 2022. With pressures mounting on President Lula to address these economic concerns, the Central Bank’s planned interest rate hikes reflect ongoing challenges. Increased costs across housing, education, and food are straining consumers, and while the government is taking action to mitigate impact, sustained high inflation is expected to persist in the near future.
Original Source: www.batimes.com.ar
