Brazil’s consumer prices in March exceeded economists’ estimates, piling on more pressure on the central bank to increase interest rates. Swap rates also rose.
The benchmark IPCA index showed that inflation rose to 0.92 percent last month from 0.69 percent in February, according to a report by the national statistics agency. This exceeded the median estimate of an increase of 0.85 percent in a Bloomberg survey of 40 analysts. The annualized inflation rate grew to 6.15 percent, up from 5.68 percent.
Brazilian officials have tried to manage the rising prices by hiking the benchmark Selic interest rates in every meeting in the last 12 months. According to Brazilian economist Enestor dos Santos, Wednesday’s data means that the interest rate hikes will continue for the foreseeable future.
“The number increases the probability of another increase in May, because it should trigger upward revisions in inflation forecasts for this year,” said Dos Santos, who is a principal economist at Banco Bilbao Vizcaya Argentaria (BBVA) told Bloomberg. “It will trigger discussion about whether inflation will end the year lower or higher than 6.5 percent, which is the ceiling of the target range.”
Food and beverages, which rose 1.92 percent, contributed much to the rising prices at more than half of the total monthly advance. Transport prices rose 1.38 percent in March after plane tickets rose 26.5 percent after earlier declining 20.6 percent in February.
The central bank has increased interest rates nine times since April 2013, which the largest number of times out of the 49 banks analyzed by Bloomberg.
To contact the reporter of this story; Jonathan Millet at firstname.lastname@example.org