Brazil’s Inflation Speeds Past Forecasts After Key Rate Cut

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Brazil’s annual inflation sped up more than expected in early August, snapping a 14-month slowdown as the central bank pledges to continue cutting its interest rate.

Government data released Friday showed consumer prices rose 4.24% in mid-August from a year earlier, more than the 4.12% median estimate from analysts surveyed by Bloomberg. Monthly inflation stood at 0.28%.

Swap rates climbed across the curve after the release of the inflation data. Contracts due in January 2025, which indicate market sentiment about monetary policy at the end of next year, rose 12 basis points in morning trading, as traders reduced bets of a longer easing cycle.During the first two weeks of August, housing costs jumped 1.08% on rising prices of utilities, representing the biggest driver of the mid-month increase. Another key contributor, health care costs, gained 0.

That’s like to add to already mounting price pressures. On Aug. 15, state-controlled Petroleo Brasileiro SA jacked up wholesale gasoline and diesel prices to reduce a cost gap with international markets.

 

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