BRASÍLIA: Brazil’s IPCA inflation accelerated 1.27% m/m in January from 0.96% in December. On a yearly basis, it remained at 10.7% in January. The unexpected rise was spread across the groups, with some concentration in the transportation and the food and beverages groups. The seasonal effect of perishable food prices worsened due to the remaining impacts from El Nino in the food group.
“This release puts upside pressures on our IPCA forecast, although we continue to see inflation decreasing this quarter. Our preliminary forecast is for inflation to increase 0.90% and 0.50% m/m in February and March, respectively, bringing the y/y inflation down to 9.5% at the end of the quarter”, says Barclays.
The data assumes a slowdown in food inflation and the already announced lowering of electricity prices starting in March 2016. The Brazilian central bank is expected to begin lowering rates by August 2016.
