“Brazil’s broadest measure of inflation slowed less than analysts expected as the government struggles to rein in consumer prices that will be pressured by new fuel price increases. Swap rates rose.
Wholesale, consumer and construction prices, as measured by the IGP-M price index, rose 0.34 percent this month, down from a 0.68 percent jump in December, the Getulio Vargas Foundation said on its website today. The gain compares with a median estimate of a 0.32 percent increase from 29 analysts surveyed by Bloomberg. The index, which is weighted 60 percent in wholesale prices, rose 7.91 percent in the past 12 months.
President Dilma Rousseff announced this month cuts to utility rates as part of plan to improve competitiveness and tame consumer price increases that have exceeded the government’s 4.5 percent target in the past 28 months. That opened the door for state-controlled oil companyPetroleo Brasileiro SA (PETR4) to say yesterday that it would raise gasoline and diesel prices by 6.6 percent and 5.4 percent, respectively.
The increase in fuel prices is less than Petrobras needs although “it will be very difficult for the government to accept new increases, especially when inflation is such a big problem,” Pedro Tuesta, chief economist at 4Cast Inc., said by telephone from Washington.
Swap rates on the contract maturing in January 2015, the most traded in Sao Paulo today, rose two basis points to 7.89 percent at 9:24 a.m. local time. The real was little changed at 1.9853 per U.S. dollar.
