Sharp interest rate hikes are starting to tame inflation (AFP)
In the opposite direction to the global inflation wave, consumer prices fell in Brazil last month, the largest percentage since it began to be recorded in 1980, indicating that sharp increases in interest rates She started doing her tame act inflation in the largest economy in Latin America.
On Tuesday, the government announced that the consumer price index fell 0.68 percent in July, exceeding analyst expectations, mainly due to a drop in the price of fuel. This led to a decrease in the annual inflation rate by 1.82 points, from 11.89 percent to 10.07 percent, the National Institute of Statistics said.
This puts an end to 25 consecutive months of price hikes that have eroded the purchasing power of the poor and increased inflation, as has been the case in the rest of the world, since the start of the war in Ukraine in February.
The National Institute of Statistics said in a statement that “this monthly result was mainly affected by the transportation sector (-4.51%), with a 14.15% decrease in fuel prices.”
On the other hand, food prices continued to rise, with prices increasing by 1.3 percent in July, compared to 0.8 percent in June. The cost of food increased by about 15% in one year.
The consumer price index has risen by 4.77% since the beginning of the year, which is just below the upper limit of the government’s target (5%).
In order to combat inflation, the central bank last week raised the key interest rate by 0.5 points to 13.75%, the highest since November 2016.
This rate, which was at its lowest level at 2% in March 2021, in the midst of the Corona pandemic, has since seen 12 consecutive increases.
Inflation, a concern for Brazilians, is an important issue in the presidential elections scheduled for October.
(AFP)
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