Gabriel Burin
(Reuters) – A rise in consumer prices in Brazil is expected to gain strength in December as energy and commodity costs fell less than the previous month, a Reuters poll showed.
In November, electricity bills fell sharply due to big cuts in additional fees for lower drought-related hydroelectric power beginning in 2024. Also, prices of many products were reduced ahead of the holiday shopping season.
But in December, monthly inflation likely accelerated to 0.57% from 0.39%, according to the median estimate of 20 economists polled Jan. 2-8. Official data will be published on Friday.
“deflation resulting from lower tariff tags (surcharges) will lose intensity and the impact of Black Friday discounts should begin to fade,” BTG Pactual analysts wrote in a report.
Meanwhile, food and beverage inflation likely continued to lead growth in Brazil’s main consumer price index, as forecast in last month’s fortnightly data.
In particular, beef became more expensive at a time of strong local demand fueled by a tight labor market, combined with strong exports supported by real currency depreciation.
Prices of basic services likely rose further last month, analysts at Itau Unibanco said, reinforcing one of the main trends cited by the central bank to justify its latest big interest rate hike.
The 12-month inflation reading was estimated at 4.88% in December, slightly above 4.87% in November, ending 2024 above the upper limit of Brazil’s official target of 3% plus/minus 1.5% percentage points.
(Reporting and reporting by Gabriel Burin; Editing by Chizu Nomiyama)
