MercoPress. South Atlantic News Agency

Brazil's March inflation marks the steepest increase for the month since 2003

Food and fuel were some of the items with the most influence

Brazil’s rate of inflation in March picked up at the quickest pace in 11 years for that month, challenging the central bank’s plan to stop raising interest rates soon and complicating President Dilma Rousseff chances of re-election.

 The benchmark IPCA consumer price index jumped 0.92% in March from February, the steepest increase for the month since 2003, statistics agency IBGE said on Wednesday.

In the 12 months through March, consumer prices rose 6.15%, inching closer to the central bank’s target ceiling of 6.5%. Food prices increased 1.92% from February as irregular rainfall in southern Brazil early this year hurt crops. Prices of basic staples such as tomatoes, potatoes and beans spiked more than 10% in March.

Fuel costs also rose sharply, with ethanol bio-fuel jumping 4.07% from February.

Brazil’s inflation is quickening right when the central bank has signalled it may end a year-long campaign of interest rate increases. The bank raised its benchmark Selic rate for a ninth straight time last week to 11%, and said it will monitor the economic situation to decide whether to raise rates again next month.

The IBGE numbers continued to show widespread price pressures. Services prices rose 9.09% on an annual basis, up from 8.18% in the prior month as salaries continue to increase on a tight labour market.

And the so-called diffusion index, a measure of the proportion of goods and services with price increases in the month, rose to 71% in March from 64.3 in February, according to calculations by Sao Paulo-based Banco Fator.

Stubbornly high inflation was one of the main reasons for a recent drop in Rousseff’s approval ratings.

While she still maintains a comfortable lead in polls on the October election, a recent survey showed more Brazilians want a change in government policies, and twice as many Brazilians think Rousseff’s predecessor and mentor, Lula da Silva, is more qualified than her to carry out changes.