MercoPress. South Atlantic News Agency

Brazilian January inflation highest since April 2005

Food and fuel prices threaten President Rousseff’s stabilization program

Brazilian officials say inflation in January was the highest monthly jump in almost six years. The government's IBGE statistics bureau said that January inflation was 0.83%, the biggest monthly jump since April 2005, when inflation was 0.87%.

Last month's figure also outpaces that of January 2010, which was 0.75%. Inflation in December was 0.63%. The government target for annual inflation is 4.5%, down from 5.9% last year.

A jump in food prices coupled with domestic demand are stoking inflation, which has exceeded the midpoint of the central bank’s target range in the past five months. Traders are wagering the central bank will lift the benchmark interest rate for a second straight time next month in a bid to contain the fastest inflation in 26 months.

Transportation costs rose 1.55% in January, fueled by a 4.13% increase in bus fares. Food prices rose 1.16%, less than the 1.32% jump in December. Meat prices, which had been fueling inflation, fell 0.19% after a 2.25% increase in December, the agency said.

Finance Minister Guido Mantega said he expects inflation to begin slowing in March as transportation costs and school fees begin to ease. Increases in global commodity prices pushed inflation higher in January, he told reporters in Brasilia.

Brazilian food prices may decline as the country’s crops enter the market, according to the Agriculture Ministry, which said in an e-mailed report that farmers have already harvested about 80% of this year’s crop.

Global food costs monitored by the United Nations jumped 25% last year, reaching a record in December. There have been protests in Algeria and Egypt while governments from Beijing to Belgrade are increasing imports, limiting their exports or releasing stockpiles.