Brazil’s broadest measure of inflation accelerated less than economists forecast in February as wholesale prices continued to decline.
Wholesale, consumer and construction prices, as measured by the IGP-M price index, rose 0.29 percent this month, down from a 0.34 percent increase in January, the Getulio Vargas Foundation said on its website today. The gain compares with a median estimate of a 0.34 percent increase from 26 analysts surveyed by Bloomberg. The index, which is weighted 60 percent in wholesale prices, rose 8.29 percent in the past 12 months.
Consumer price inflation, which reached 6.18 percent in January, is testing the central bank’s ability to hold its benchmark rate at a record low to revive growth in the world’s second-biggest emerging market. President Dilma Rousseff last month cut energy rates and allowed state-run oil company Petroleo Brasileiro SA to raise gasoline prices less than expected as part of plan to check price increases that have outpaced the 4.5 percent target for more than two years.
Wholesale prices fell 1.58 percent in February after declining 1.41 percent last month. Consumer food prices rose 1.51 percent, compared with 1.97 percent in January.
“Apart from any major shocks, food inflation should not be as unfavorable as it was last year,” central bank President Alexandre Tombini said at an event in New York on Feb. 25. Food and beverage prices as measured by the IPCA index rose 9.9 percent last year.
Inflation is showing “more resistance” than policy makers would like and will be contained this year by a 14 percent increase in the output of grains, more moderate credit growth than in past five years, and slower services inflation associated with lower wage increases, Tombini said.
Economists in the latest weekly central bank survey forecast consumer inflation of 5.69 percent this year and 5.50 percent in 2014.