Brazil's inflation rate drifts further above target in April

Brazil's annual inflation rate rose to 5.53 per cent in April from 5.48 per cent in the prior month, official data showed on Friday, days after the central bank hiked its benchmark interest rate to the highest level in almost 20 years due to stubbornly high inflation.

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Consumer prices in Latin America’s largest economy remain well above the Brazilian central bank’s inflation target of 3 per cent with a tolerance of plus or minus 1.5 percentage points. Monthly inflation as measured by the IPCA index rose 0.43 per cent, decelerating from the 0.56 per cent growth registered in March.

Finance Minister Fernando Haddad said the reading came in line with expectations, adding he is confident that inflation will close the year “a little better” than projections. On Monday, private economists surveyed by the Brazilian central bank lowered their expectations for the country’s inflation rate in 2025 to 5.53 per cent, well above the 4.8 per cent estimate unveiled by the central bank this week.

The food and beverages category as well as the health and personal care group were the main contributors to the monthly rise, according to IBGE.

Brazil's central bank monetary policy committee, known as Copom, on Wednesday hiked its Selic benchmark interest rate by 50 basis points to 14.75 per cent, the highest level since 2006.

Policymakers left future steps open amid global uncertainties, stressing that the current environment calls for a “significantly contractionary monetary policy for a prolonged period” to bring inflation to target.