Brazil: Inflation remains at over-12-year high

Consumer prices in January increased 1.27% over the previous month. The print was above the 0.96% increase recorded in December and surpassed market expectations. The monthly result was mainly driven by a substantial rise in prices for food and beverages as well as in transportation.

Inflation in January remained at December’s 10.7%, which marked the highest level since November 2003. Despite a number of hikes in the Central Bank’s SELIC rate in 2015 and the country’s depressed economy, inflationary pressures have risen dramatically over the course of the year and inflation remains far above the Central Bank’s tolerance margin of plus/minus 2.0 percentage points around 4.5%.

Panelists participating in the LatinFocus Consensus Forecast see inflation closing 2016 at 7.0%, which is up 0.2 percentage points from last month’s forecast. For 2017, the panel expects inflation of 5.5%.