Brazil Inflation Climbs to 5.06%, Highest in 17 Months

Brazil’s annual inflation surged to 5.06% in February 2025, the highest since September 2023, exceeding market expectations. Notable increases were seen in housing, utilities, and food prices, while transportation inflation slowed slightly. Overall, consumer prices rose by 1.3% from the previous month.

The annual inflation rate in Brazil rose to 5.06% in February 2025, an increase from 4.56% in January and reaching the highest level since September 2023. This rate exceeded market forecasts of 5% and signifies a deviation from the Central Bank of Brazil’s upper tolerance threshold of 4.5%, complicating potential responses amid slowing GDP growth.

Prices for housing and utilities significantly increased by 3.78%, rebounding from a previous decline of 0.36% in January. This rise was influenced by the reduced effect of temporary government credits on electricity bills, resulting in a sharp increase in power costs, which rose 0.33% compared to a decrease of 13.98%.

Inflation rates also intensified in various categories, including food and beverages at 7.25%, clothing at 2.95%, and household maintenance goods and services at 1.51%. In contrast, transportation inflation showed a minor slowdown, recording a rate of 5.21%, down from 5.32%. Overall, consumer prices increased by 1.3% compared to the prior month.

In summary, Brazil’s inflation reached a significant high of 5.06% in February 2025, driven by notable increases in housing, utilities, and food prices. This rise presents challenges for economic policy as it exceeds the Central Bank’s tolerance and complicates reactions to declining GDP growth. The mixed trends in inflation categories underscore the complexity of the current economic landscape in Brazil.

Original Source: www.tradingview.com