Brazil’s Consumer Price Rises in December

By Gabriel Burin

(Reuters) – Brazil’s consumer price increases are anticipated to gain traction in December, with energy and goods costs falling less than in the previous month, according to a Reuters poll.

In November, electricity bills dropped significantly due to major cuts in surcharges caused by reduced hydroelectric output from a drought earlier in 2024. Additionally, many product prices were reduced ahead of the holiday shopping season.

However, in December, monthly inflation is projected to rise to 0.57% from 0.39%, based on the median estimate of 20 economists polled from January 2-8. Official data will be released on Friday.

Analysts at BTG Pactual reported that “electricity deflation due to lower tariff flags will lose intensity, and the effects of Black Friday discounts should start to fade.”

Food and beverage inflation is likely to continue driving Brazil’s headline consumer price index, which was expected based on last month’s biweekly data.

Particularly, the cost of beef has risen amid strong local demand supported by a tight job market and robust exports due to the depreciation of the real currency.

Core service prices likely increased further last month, according to analysts at Itau Unibanco, reinforcing a key trend the central bank cited to justify its recent major rate hike.

The estimated 12-month inflation rate for December is 4.88%, slightly above the 4.87% recorded in November, closing 2024 just beyond the upper limit of Brazil’s official target of 3% ± 1.5% percentage points.

(Reporting and polling by Gabriel Burin; Editing by Chizu Nomiyama)