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Brazil Consumer Prices Rise More Than Expected After Rate Hike

Brazil’s consumer prices rose more than forecast in July.

Brazil Consumer Prices Rise More Than Expected After Rate Hike
Shoppers wearing protective masks walk on Oscar Freire street in Sao Paulo, Brazil. (Photographer: Jonne Roriz/Bloomberg)

Brazil’s consumer prices rose more than forecast in July, as the central bank lifts its interest rate in efforts to bring inflation back to target next year.

Prices increased 0.96% from the month prior, just above the 0.95% median estimate from analysts in a Bloomberg survey. Annual inflation sped up to 8.99%, more than double this year’s 3.75% target, the national statistics agency reported Tuesday.

Brazil Consumer Prices Rise More Than Expected After Rate Hike

The main drivers were housing costs, which jumped 3.1% on the month -- due mainly to electricity bills that increased 7.88% -- while transportation prices rose 1.52%, the statistics agency said. On the other hand, healthcare slipped 0.65%.

Brazil’s central bank has raised the benchmark Selic 325 basis points since March. Their efforts to bring inflation to next year’s target of 3.5% have been complicated by demand for the country’s raw materials, as well as by a drought that has caused utility bills to shoot up. At the same time, residents are returning to work as the pandemic ebbs, further pressuring services costs.

Read more: Brazil Central Bank Says It Will Raise Key Rate Above Neutral

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