Brazil Inflation Remained High In March 2023

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Brazil Inflation Remained High In March 2023

Brazil's Inflation Remained High In March 2023

Inflation in Brazil remained elevated even during March 2023, mainly due to a rise in gasoline bills. In fact, inflation has once again resurfaced the cost of living problems in Brazil.

Considering how Brazil's economy is stagnant, it will most likely lead to more disagreement over the country's economic policy.

For the most part, consumer prices during Q3 & Q4 2022 cooled down due to the aggressive policy by the central bank. But after the new president took office in 2023, inflation pressure returned once again!

After the recent inflation report from Brazil, analysts believe that any chances of policy easing will be pushed back by the end of 2023. What we will be getting from Brazil is a more hawkish approach!

IPCA Reading For March Is 0.77%

IPCA, which is the benchmark index for consumer prices in Brazil, increased by 0.77% during March. This was mainly in line with most economists.

Overall, the food inflation in Brazil remained low during this month when compared with the same period of time last year. However, the resumption of the taxes on ethanol and gasoline has taken a toll and will be visible in the inflation reports.

For now, the benchmark rate in Brazil is sitting at 13.75%, and it appears that high inflation will make it difficult for Banco Central do Brasil to make any changes to this rate!

If we take March's inflation reading of 0.77% into account, it means a 2.2% cumulative clip for the 1st quarter. In other words, the current pace of inflation will likely cross the 3.25% goal set for this year.

Just last week, there were rumors that the government will introduce rate cuts very soon. But after the recent reading and comments by Brazil's central bank governor, it appears these were just rumors.

According to the finance minister and Brazil'z central bank chief, the fuel tax will improve the government's revenue & will also lower the inflation in the country.

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