BRASILIA: Brazil's annual inflation rate probably approached 8 percent in mid-March as prospects of energy rationing pushed up electricity rates, a Reuters poll showed on Tuesday.
Consumer prices likely rose 7.88 percent in the 12 months to mid-March, up from a 7.36 percent increase in mid-February, according to the median of 20 market forecasts for the IPCA-15 index due on Friday.
If confirmed, it would be the highest mid-month inflation rate since May 2005.
On a monthly comparison, consumer prices likely rose 1.21 percent from mid-February, slowing from an increase of 1.33 percent in the previous reading, according to the median forecast of 26 economists.
High inflation has been one of Brazil's biggest obstacles to faster economic growth in recent years, weighing on consumer and business confidence and prompting the central bank to raise interest rates to double-digits.
It has also undermined the popularity of President Dilma Rousseff, who was targeted by large anticorruption protests on Sunday. Electricity rates rose as much as 39.5 percent in early March after the government finally opted to pass on the higher costs of running emergency thermal generators.
The government is scrambling to curb electricity demand to avoid energy rationing after shielding consumers from higher rates last year.
Insufficient rain has undermined the country's hydroelectric system, which produces most of its power generation.
Food inflation is also expected to have picked up in mid-March, according to economists in the poll.
The IPCA-15 index may show evidence that the rapid plunge in Brazil's currency in recent weeks is putting further pressure on prices, especially of imported or tradable goods. The risks that the currency depreciation could fuel price increases across the economy prompted the central bank to raise interest rates to a six-year high of 12.75 percent earlier this month.
"The pass-through from a weaker currency to inflation is far from trivial," Alberto Ramos, head of Latin America economic research at Goldman Sachs, wrote in a note. "The central bank needs to remain extremely vigilant on the monetary policy front in order to successfully anchor inflation expectations."
Estimates for the monthly inflation rate in the month to mid-March ranged from 1.03 percent to 1.40 percent, and forecasts for the annual inflation rate varied from 7.68 to 8.09 percent.
Comments
Comments are closed.