In October, Brazil experienced a rise in inflation, reaching an annual rate of 4.76 percent, as reported by official data released on Friday. This figure surpasses the central bank’s target of three percent.
The consistent increase in consumer prices was a key reason behind the central bank’s decision on Wednesday to raise its benchmark Selic interest rate by half a percentage point, bringing it to 11.25 percent. This development poses a challenge for President Luis Inacio Lula da Silva’s left-wing administration, which is anticipated to announce a series of budgetary cut measures aimed at balancing the national budget.
According to the state statistics agency IBGE, October saw a 0.56 percent inflation spike, higher than the 0.44 percent recorded in September. The increase was largely attributed to rising electricity costs and meat prices, both consequences of a prolonged drought impacting agricultural production and hydroelectric power generation.
IBGE’s director of research, Andre Almeida, noted that the rise in meat prices “can be explained by reduced supply due to drier climate conditions and fewer animals being slaughtered, alongside a boost in export volumes.”
The annualized inflation rate of 4.76 percent slightly exceeded the 4.73 percent predicted by 31 financial and analytical institutions surveyed by Valor, an economic publication. It also surpassed the central bank’s upper tolerance limit of 4.5 percent.
The central bank has indicated that its future interest rate decisions will be based on ongoing assessments of inflation trends.
