Brazil's April inflation matches forecasts despite growing external risks
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A woman looks at the shelves with meat in Carrefour supermarket in Sao Paulo, Brazil November 27, 2024. REUTERS/Amanda Perobelli/File Photo
SAO PAULO, May 12 (Reuters) - Brazil's inflation was in line with market expectations in April, official data showed on Tuesday, with the 12-month rate remaining within the central bank's target range even as policymakers warn of risks from the Middle East conflict.
Annual inflation in Latin America's largest economy stood at 4.39% in April, statistics agency IBGE said, up from 4.14% a month earlier but in line with the 4.40% forecast by economists in a Reuters poll.
On a monthly basis, consumer prices rose 0.67%, slowing from a 0.88% increase in March. Economists had expected a 0.69% rise.
Brazil's central bank last month cut its benchmark interest rate by 25 basis points for a second straight meeting to 14.50%, but left its next move on June 16-17 open, citing emerging inflation risks as the U.S.-Israel war with Iran drags on.
Policymakers, who had kept borrowing costs at a nearly 20-year high since July 2025 before starting an easing cycle in March, have vowed to bring inflation back to their 3% target, plus or minus 1.5 percentage points.
Private economists surveyed by the bank, however, have raised their 2026 inflation forecast for nine consecutive weeks, now seeing it ending the year at 4.91%.
The April increase in inflation was mainly driven by food and beverage prices, which rose 1.34%. On the other hand, transportation costs were nearly unchanged after jumping in March following the global oil price shock related to the Iran war.
"The rise in inflation in April shouldn't prevent the central bank from continuing with its cautious monetary easing cycle," Capital Economics' senior emerging markets economist Liam Peach said, forecasting 25-basis-point cuts at each of the upcoming meetings.
(Reporting by Gabriel AraujoEditing by Keith Weir)
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