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Brazil's Inflation Rises Faster Than Expected In March, Highest In 28 Years

Brazil's Inflation Rises Faster Than Expected In March, Highest In 28 Years
Brazil's inflation rose faster than expected in March for the first time in 28 years, according to official numbers released on Friday, as rising fuel prices weighed on the economy, which was hit by an oil shock following the Ukraine conflict.
The IPCA consumer price index increased 1.62 per cent in February, exceeding the 1.3 per cent gain predicted by economists in a Reuters poll and outpacing the 1.01 per cent increase in February.
This was the greatest monthly increase since 1994, before the establishment of the real currency, reflecting the region's largest economy's severe inflationary pressures.
Inflation rose 11.30 per cent in the year to March, up from 10.54 percent the previous month and considerably above the central bank's 3.5 per cent year-end target.
According to the IBGE, eight of the nine product and service groups surveyed increased in March, with transportation up 3.02 per cent and food and beverages increasing 2.42 per cent.
According to IBGE, the two categories alone accounted for about three-quarters of the month's inflation.
It also stated that the 6.7 per cent increase in fuel prices had an impact on the transportation result. The price of gasoline, in particular, has increased by 6.95 per cent.
Petrobras, the state-owned oil company, announced a large rise in fuel prices in mid-March to keep up with global markets after Russia's invasion of Ukraine caused oil prices to skyrocket.
Roberto Campos Neto, the head of Brazil's central bank, predicted that inflation would peak in April.
To combat the continuous rise in consumer prices, authorities raised the country's benchmark interest rate from a historic low of 2 per cent % in March to 11.75 per cent, indicating another 100 basis-point hike in May. This might bring an end to the Fed's aggressive tightening cycle, which could be a major stumbling block for economic growth this year.

Christopher J. Mitchell

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