Brazil inflation hits 12-year high amid economic crisis
Annual inflation exceeds 10 percent for the first time in 12 years, pushed by rising prices for fuel and food
By Ben Tavener
SAO PAULO, Brazil
Annual inflation in Brazil rose to 10.5 percent in the 12 months to November, the highest rate recorded in 12 years, as the country's economy battles a deep recession amid ongoing political turmoil.
The broad consumer price index, or IPCA, rose 1.01 percent in November, bringing the rate of inflation in 12 months to 10.48 percent, according to figures from the government's statistics agency, the IBGE.
It is the first time that inflation has entered double digits since Nov. 2003, when it exceeded 11 percent, the Folha de S.Paulo newspaper reported.
November's higher-than-expected inflation results come on the back of a spike in food prices and the rising cost of fuel, electricity and transport. Food and drink were 1.83 percent more expensive in November, and a liter of gasoline rose 3.21 percent.
The central bank, responsible for countering inflation, is working to ensure the inflation target is not exceeded next year, but with interest rates – the main countermeasure – already at 14.25 percent, analysts say there is currently scant room for maneuver.
Economists this week predicted inflation would end 2015 at 10.44 percent, and reach 6.7 percent in 2016 – both well above the central inflation target of 4.5 percent.
Brazil's economy is expected to shrink by 3.5 percent this year and by 2.3 percent in 2016, amid ongoing economic and political crises.
Congress has virtually ground to a halt after politicians divided over a bid to impeach President Dilma Rousseff over allegations of fiscal responsibility crimes, and attempts to oust lower house speaker Eduardo Cunha, who is accused of corruption.
The government has struggled to force fiscal adjustments through Congress, which it argues are vital to kick-starting the economy. A Supreme Court decision Tuesday temporarily suspended all proceedings relating to impeachment bid; opposition deputies responded by vowing to block all votes until the court made its decision.
The president is keen to suspend Congress's January recess and move forward with impeachment proceedings, which the government believes it currently has the congressional votes to defeat, before the economy deteriorates further.
