Brazilian government agency IBGE released data on Friday that indicated a 0.76% rise in Brazil’s IPCA-15 consumer price index in the month to mid-February, beating expectations. Economists polled by Reuters expected a 0.72% increase.
February’s consumer price index movements far exceed January’s 0.55% rise, while annual inflation also continued to rise well above the government’s target. While February’s annual inflation of 5.63% was lower than January’s rate of 5.87%, it remained above economists’ forecasts of 5.6%.
With President Luiz Inacio Lula da Silva and central bank governor Roberto Campos Neto clashing over high-interest rates, speculation has emerged of Brazil’s government moving to increase inflation targets. Currently, the South American nation has an inflation target of 3.25% this year and 3% in 2024 and 2025.
Central bank governor Campos Neto has stood by the decision to pursue inflation targets by raising interest rates, which currently stand at a six-year high of 13.75%. In President Luna’s view, this strict monetary policy has rendered borrowing costs too high, thereby curbing potential economic growth.