Brazil's annual inflation rate accelerated in October to just below 10%, the highest reading in almost 12 years, after sharp fuel and food price hikes. Consumer prices, as measured by the benchmark IPCA index, rose 9.93% in 12 months through October, up from 9.49% in September, statistics agency IBGE said in a release. In the first ten months of the year inflation reached 8.52%
On a monthly basis, the IPCA index rose 0.82%, up from an increase of 0.54% in September. A government-led increase in fuel prices that Petrobras recently implemented was responsible for about a third of the month's inflation, IBGE said.
Petrobras raised gasoline and diesel prices by 6% and 4%, respectively. Food prices also gained traction, led by rising costs for poultry, sugar and beverages. Brazil's annual inflation is running at more than double official target of 4.5%, partly because of a string of tax and government-controlled price increases earlier in the year.
Accelerating inflation is also taking a toll on economic activity, as Brazil braces for its steepest recession in a quarter century. It has also reduced the probability of interest rate cuts by the central bank next year from the current 14.25%, economists anticipate.