Consumer inflation rose by 0.53 percent in June, slightly below analysts’ expectations yet still the highest rate for the month since 2018. Once again, rising utility bills pushed the index upwards, as Brazil grapples with a water crisis that threatens the country’s energy supply.
With June’s performance, consumer prices are up 8.35 percent over the last 12 months, some way above the government’s 3.75-percent target for 2021. The last time the index reached such levels was in September 2016, when the country battled a severe recession.
Energy, transport, and food have been the biggest contributors to Brazil’s eye-watering inflation rates, but some of the segments hit hardest by the pandemic have shown signs of recovery amid economic reopening. The fashion and apparel sector saw inflation of 1.21 percent in June. As we explained on June 28, rising inflation is also coupled with better GDP growth prospects, as the Brazilian economy has been able to adapt to the Covid-19 crisis.