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Brazil inflation hits 18-year high

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 Brazil s annual inflation rate hit an 18 year high of 10 74 percent in November the government said on Friday although the monthly rate fell slightly showing that the central bank s aggressive tightening cycle may be starting to work Latin America s largest economy is being hit by both a recession and rising prices giving the central bank hellip
Brazil inflation hits 18-year high

NNN: Brazil’s annual inflation rate hit an 18-year high of 10.74 percent in November, the government said on Friday, although the monthly rate fell slightly, showing that the central bank’s aggressive tightening cycle may be starting. to work.

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Latin America’s largest economy is being hit by both a recession and rising prices, giving the central bank the unenviable task of trying to curb inflation without causing economic growth to plummet.

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Rising fuel, transportation and housing prices in November drove inflation to the biggest year-on-year rise since 2003, the national statistics institute said.

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However, in a ray of light, food prices fell, helping to slow the monthly inflation rate to 0.95 percent, down from 1.25 percent in October and below expectations for analysts 1.07 percent.

That came after the central bank made seven consecutive hikes to the benchmark interest rate in an attempt to cut inflation, including huge 1.5 percentage point hikes in its last two meetings.

The Selic rate now stands at 9.25 percent, the highest since mid-2017.

The new inflation figures “provide a crumb of comfort that the headline rate is stabilizing a little earlier than anticipated,” economist William Jackson of the Capital Economics consultancy said in a note.

But “the data still provides a lot to worry about for policy makers at the central bank,” he added.

“It will not deter them from raising the Selic rate by another 150 basis points in February.”

The central bank has been struggling to get closer to its inflation target: 3.75 percent for this year and 3.5 percent for next.

Double-digit inflation has left many Brazilian families struggling to make ends meet.

That has further weighed on the popularity of President Jair Bolsonaro, who is already sinking.

Polls currently place the far-right leader on track to lose to former left-wing president Luiz Inácio Lula da Silva in next October’s elections.

Seeking a popularity boost, Bolsonaro nearly doubled the average welfare payment for low-income families to 415 reais ($ 72) a month, and moved to expand the number of those eligible.

However, analysts warn that a jump in social spending can only further boost inflation.

Brazil’s economy contracted 0.4 percent in the second quarter of 2021 and 0.1 percent in the third.

Source Credit: TheGuardian

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