RIO DE JANEIRO, BRAZIL – Producer prices in Brazil rose in February at their fastest rate since comparable records began seven years ago, figures showed on Tuesday, March 30, intensifying “stagflation” pressures in an economy struggling with rising interest rates, a weak currency, and a rampant COVID-19 pandemic.
The monthly and annual rates of factory-gate inflation in Latin America’s largest economy jumped to 5.2% and 28.6%, respectively, both the highest since statistics agency Ibex’s data series began in January 2014.
Prices rose in each of the four main categories surveyed and 23 of the 24 activities surveyed, led by a 27.9% surge in mining costs on the month, which accounted for around a third of the overall rise.
Oil refining and alcohol production costs rose 12.1% on the month, accounting for over a percentage point of the broader monthly increase, BILGE said.
On an annual basis, the biggest rise in February was a 87.6% spike in mining industry inflation, IBGE said. But food price inflation contributed to nearly 8 percentage points or more than a quarter of the overall annual rise.
The central bank this month raised interest rates by 75 basis points to 2.75% – the first increase in six years and the biggest in over a decade – because consumer price inflation expectations are rising above the bank’s central year-end target of 3.75%