By Jamie McGeever
BRASILIA (Reuters) – Brazilian consumer inflation rose above 8% in the month to mid-June for the first time in almost five years, figures showed on Friday, driven by strong rises in gasoline and electricity prices.
The IPCA-15 annual price index rose to 8.1% from 7.3% a month earlier, statistics agency IBGE said, another sharp rise that shows why the central bank last week again raised interest rates aggressively to try and keep 2022 inflation expectations in check.
That was the highest level since October 2016, and just shy of the 8.2% median forecast in a Reuters poll of economists. A year ago, annual inflation was under 2%.
The 0.83% monthly rate of inflation in mid-June was virtually double the 0.44% the month before and also pretty much in line with a Reuters poll estimate of 0.86%.
According to IBGE, prices rose in all nine groups of goods and services covered.
Transport costs rose 1.35% in the month, accounting for just over a quarter of the overall rise, IBGE said. Within that segment, gasoline prices jumped 2.9% and are now up 46% over the last 12 months.
Housing costs rose 1.67% in the month, also accounting for around a quarter of the overall rise, led by a 3.9% surge in electricity prices, IBGE said.
The central bank’s year-end inflation goal is 3.75% with a margin of error of 1.5 percentage point on either side, and its central target for next year is 3.50%.
The central bank last week raised its benchmark Selic rate by 75 basis points for a third time to 4.25%. Minutes of the meeting showed that policymakers discussed an even bigger increase and could make a bolder move in August.
Central bank chief Roberto Campos Neto said on Thursday that many of the recent inflation surprises were transitory but had spread. He said the central bank would use all the tools at its disposal to ensure its 2022 inflation goal was met.
(Reporting by Jamie McGeever; Editing by Gareth Jones)
