BRASILIA: Brazil's annual inflation rate probably rose to the highest in nearly 10 years in February despite slumping economic growth, driven by an increase in fuel taxes, a Reuters poll of economists on Tuesday shows.
Inflation as measured by the benchmark IPCA index probably rose to 7.54 percent in the 12 months through February, the highest since May 2005 and far above the government's 4.5 percent target, according to the median forecast of 24 economists polled by Reuters.
Economists widely expect inflation to remain above 7 percent through 2015, leaving the central bank with little choice but to raise interest rates to the highest in six years even as the economy looks set to shrink this year by the most since 1990. In January, inflation stood at 7.14 percent.
On a monthly basis, consumer prices probably increased 1.08 percent from January, easing slightly from a rise of 1.24 percent the previous month, according to the median of 28 forecasts in the survey.
Government statistics agency IBGE reports official consumer price data on Friday at 9 a.m. (1200 GMT)
Finance Minister Joaquim Levy raised fuel taxes in late January to plug a widening budget deficit. State-run Petroleo Brasileiro SA, which has turned away from credit markets amid a corruption scandal, also opted not to pass lower global oil prices along to consumers to protect cash.
High inflation has haunted Brazilian President Dilma Rousseff since she took office in 2011, weighing on business and consumer confidence and keeping the economy stuck in a rut.
The slight slowdown in monthly inflation from January was likely driven by lower food price increases and the fading impact from the recent hikes in power rates and bus fares, according to Alberto Ramos, head of Latin America economic research at Goldman Sachs.
Forecasts for the monthly inflation rate in February ranged from 0.90 percent to 1.21 percent, while estimates for the 12-month rate varied from 7.40 percent to 7.69 percent.
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