By Gabriel Burin
(Reuters) – Brazil consumer price rises are expected to have gained traction in December as energy and goods costs fell less than in the previous month, a Reuters poll showed.
In November, power bills dropped sharply due to big cuts in surcharges for lower hydroelectric output related to a drought earlier in 2024. Also, prices of many products were slashed before the holiday shopping season.
But in December, monthly inflation probably accelerated to 0.57% from 0.39%, according to the median estimate of 20 economists polled Jan. 2-8. Official data will be released on Friday.
“Electricity deflation resulting from lower tariff flags (surcharges) will lose intensity and the impact of Black Friday discounts should begin to disappear”, analysts at BTG Pactual wrote in a report.
Meanwhile, food and beverage inflation likely continued to lead the rise of Brazil’s headline consumer price index, as anticipated in last month’s biweekly data.
In particular, beef has become costlier at a time of robust local demand driven by a tight job market, combined with strong exports supported by the real currency’s depreciation.
Core service prices likely advanced further last month too, said analysts at Itau Unibanco, reinforcing one of the main trends cited by the central bank to justify its latest jumbo rate hike.
The 12-month inflation reading was estimated at 4.88% in December, just marginally above 4.87% in November, closing 2024 beyond the upper limit of Brazil’s official target of 3% plus/minus 1.5% percentage points.
(Reporting and polling by Gabriel Burin; Editing by Chizu Nomiyama)