Despite pressure from food inflation, Brazilian consumer prices climbed less than predicted in the month to mid-June, according to data released on Wednesday by the IBGE statistics agency.
Inflation in Latin America’s biggest economy, as assessed by the IPCA-15 index, was 0.39% for the period, down from 0.44% the previous month.
Food and drinks were the biggest drivers, with prices growing by 0.98%, compared to 0.26% the previous month.
Brazil’s central bank unanimously stopped its lowering cycle last week, keeping its benchmark interest rate at 10.50% despite rising inflation predictions, budgetary challenges, and the prospect of additional rate reduction by the US Federal Reserve.
The data “won’t change the picture that the central bank’s easing cycle is over–for this year at least,” William Jackson, Chief Emerging Markets Economist at Capital Economics, wrote in a note to investors.
“With the headline inflation rate likely to rise further in the coming months, the real still under pressure and no end in sight to the government’s fiscal saga, we don’t see scope for any more interest rate cuts over the rest of this year.”
Brazil’s annual inflation rate reached 4.06% in the first half of June, according to IBGE, compared to an estimated 4.12%.
Private economists surveyed weekly by the central bank expect interest rates to remain constant through 2024 and decline to 9.5% by the end of 2025.
