Brazil’s Inflation at Nearly 10-year High

Brazil’s consumer prices accelerated more than expected to 7.7 percent in February of 2015, the highest level since May of 2005 when inflation reached 8.05 percent. The number came well above the 6.5 percent ceiling of the central bank’s target range.

In the beginning of 2015, recently re-elected Government adopted a number of austerity measures and tax increases aiming at balancing overall budget which in 2014 was in a deficit of nearly 7 percent of the GDP. The new taxes have raised prices for basics like electricity, bus fares and gasoline and contributed directly to the rise in inflation rate.

On a monthly basis, inflation rate was 1.22 percent, down from 1.24 percent rise last month. It was the highest February’s figure since 2003, when inflation stood at 1.57 percent. The biggest upward pressure came from gasoline prices, which rose by 8.42 percent. Gasoline alone accounted for 25.4 percent of the rise, increasing the cost of transportation by 2.2 percent

Housing cost increased by 1.22 percent over January mainly due to 3.14 rise in electricity prices. Food prices slowed by 0.81 percent from 1.48 percent recorded in January.

Downward pressures came from clothing (-0.9 percent) and communications (-0.02 percent).

Brazil’s Inflation at Nearly 10-year High

Carolina Cunha |
3/6/2015 5:34:39 PM