Food prices contribute to record high Brazilian inflation

According to a Reuters poll on Monday 22 February, Brazil's annual inflation rate likely closed in on 12-year highs in mid-February as food prices rose sharply. Food prices could once again be the main inflation driver since heavy rainfall hit harvests of onions, tomatoes and other cooking staples, analysts said.

Consumer prices were seen to have risen 10.71 percent in the 12 months through mid-February, easing from a 12-year high of 10.74 percent in the year to mid-January, according to the median of 18 forecasts in the survey for the IPCA-15 index due on Tuesday. The estimates ranged from 10.52 to 10.83 percent.

Despite a year-old recession, which has progressively worsened, and double-digit interest rates, Brazil's inflation remains one of the highest among major world economies. Stoking inflation has been the country's currency hitting a record low, thus raising import costs.

Inflation is expected to slow down in coming months as the impact of many increases in taxes and utility rates by President Dilma Rousseff's government last year starts to fade. However, most economists are sceptical about the likelihood of inflation falling to the government's target of 4.5 percent without further interest rate hikes by the central bank.

Source: Reuters, 2016/

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