Brazil's Inflation Tops Estimates in February to Highest Monthly Figure in A Year

• Brazil's consumer prices rose slightly more than expected in February, reaching the highest monthly figure in one year driven by increased education prices, government statistics agency IBGE (Brazilian Institute of Geography and Statistics) said on Tuesday, March 12.
• Inflation, measured by the IPCA (Extended National Consumer Price) index, was at 0.83% last month, while economists polled by Reuters expected 0.78%. This monthly figure was the highest since February last year, when it had registered inflation of 0.84%.
• Education prices rose 4.98% in the month and was responsible for 0.29 percentage points of the data, as schools and universities hike tuition fees at the start of the year. Food and beverage prices also contributed to the results, IBGE said.

• Notwithstanding, the 12-month headline inflation came in at 4.50%, slowing down from the 4.51% registered in January, but above the 4.44% expected by economists.

• The monetary policy committee of Brazil's central bank will meet next week to set its benchmark interest rate, which currently stands at 11.25%, after the authority kicked off its easing cycle in August with a 50-basis-point cut after nearly a year of unchanged rates at a six-year high of 13.75%.
• "There's not enough in this inflation release to make the central bank rethink the 50 bps cuts that it has signalled at the meeting next week and the subsequent meeting in May," said William Jackson, Chief Emerging Markets Economist at Capital Economists. "But if core inflation remains elevated, we think Copom will shift to smaller 25 bps cuts around mid-year," he added.

 (Source: Reuters)