Brazil’s benchmark consumer price index IPCA vastly exceeded expectations and rose by 1.62 percent — the highest for a month of March since 1994, when the Real became Brazil’s currency. Markets had expected a rise of around 1.33 percent. The result brought the country’s 12-month inflation rate to 11.3 percent, the highest since October 2003.
The effects of the war in Ukraine, which started on February 24, began to be felt in March – and though they were felt across the board, they had an especially large impact on fuel and food products such as oil. Commodity indexes are through the roof.
Oil prices have surged significantly and led Petrobras, Brazil’s oil and gas giant, to announce on March 10, a massive hike in fuel prices at refineries. At the pump, prices rose by almost 7 percent — and the fuels segment was one of the key inflation drivers last month.
As gas becomes more expensive, it impacts other products, as trucks are the leading means of goods transportation in Brazil. “We observed a widespread increase in food prices, driven by weather issues, but also by higher freight costs,” said Pedro Kislanov, who oversees the IPCA survey.
Per Brazil’s official statistics agency, fuel inflation could still hit consumer prices in April, indicating that inflation will not ease in the short term. That is worrisome news for President Jair Bolsonaro, who is betting on the creation of a feel-good factor to win a second term in October.