Written by Gabriel Borin
(Reuters) – Consumer price increases in Brazil are expected to gain momentum in December, with energy and commodity costs lower than in the previous month, a Reuters poll showed.
In November, energy bills fell sharply due to significant reductions in surcharges for drought-related declines in hydropower production earlier in 2024. Prices for many products also fell ahead of the holiday shopping season.
But in December, monthly inflation may have accelerated to 0.57% from 0.39%, according to the average estimate of 20 economists polled from January 2 to 8. Official data will be published on Friday.
“The contraction resulting from lower tariffs (surcharges) will lose intensity and the impact of Black Friday discounts should begin to disappear,” analysts at BTG Pactual wrote in a report.
Meanwhile, food and beverage inflation is likely to continue to lead the rise in Brazil's headline CPI, as expected in the bi-weekly data released last month.
In particular, beef has become more expensive at a time of strong domestic demand driven by a tight labor market, coupled with strong exports supported by real currency depreciation.
Analysts at Itau Unibanco said prices for basic services were likely to rise further last month as well, reinforcing one of the key trends cited by the central bank to justify its recent rate hike.
The 12-month inflation reading was estimated at 4.88% in December, slightly higher than 4.87% in November, to close 2024 above the upper end of Brazil's official target of 3% plus/minus 1.5% percentage points.
(Reporting and polling by Gabriel Borin; Editing by Shizuo Nomiyama)
