BRASÍLIA: Brazil’s consumer inflation accelerated more than all analysts forecast in January after a controversial central bank decision to keep interest rates unchanged last month.
The benchmark IPCA consumer price index rose 1.27 percent in January, up from 0.96 percent in December, the national statistics agency said Friday. That was higher than all forecasts from 42 economists surveyed by Bloomberg, whose median estimate was for a 1.1 percent rise. Annual inflation unexpectedly accelerated to 10.71 percent.
The data surprised economists who expected inflation peaked in December following a spike last year that routed consumer confidence. Latin America’s largest economy is forecast to contract for two consecutive years, and the central bank invoked weaker economic activity as well as external uncertainties to justify its decision not to raise the benchmark rate last month. Analysts said the move dented the institution’s credibility as an inflation fighter.
Swap rates on the contract due January 2017 rose 7 basis points to 14.60 percent at 9:09 a.m. local time. The real weakened 0.3 percent to 3.9018 per U.S. dollar. It has dropped about 30 percent in the past year, the worst performer among 16 major currencies tracked by Bloomberg, which has pressured inflation by boosting the cost of imports.
Food and beverage prices rose 2.28 percent in January, the highest monthly print since December 2002, after a 1.5 percent increase in December, the statistics agency said in its report. Personal expenses rose 1.19 percent after a 0.57 percent increase.
