World Economy

Brazil President Anguished Over Inflation

Brazil President Anguished Over InflationBrazil President Anguished Over Inflation

Brazilian President Dilma Rousseff said she was “quite anguished” over the country’s rising inflation rate and said her government would do “the possible and the impossible” to rein in prices.

In an interview with Globo TV broadcast on Saturday, she said the government needed to conclude its fiscal adjustment plan as fast as possible to overcome a “temporarily difficult” economic situation, Reuters reported.

“I’m quite anguished over inflation, I believe this is one of the things that worry me the most,” Dilma said. “I know this is temporary but I also know that ... it affects people’s daily lives.”

Brazil’s consumer inflation hit an 11-year peak of 8.47 percent in May and economists say it may accelerate further before easing under pressure from an aggressive monetary policy campaign.

To bring inflation back to an official 4.5 percent target by the end of 2016, the central bank is expected to further raise the benchmark Selic rate in coming months.

Brazil’s interest rates are already at 13.75 percent, the highest since January 2009.

“I’m worried because I think we’ll have to make a huge effort. And I want to say this: we will do the possible and the impossible for Brazil to have a very stable inflation rate again, within the target,” Rousseff said.

She said inflation was expected to come down by the end of the year but also cautioned that this depended on factors outside the government’s control.

 Above Target

Brazilian inflation picked up unexpectedly in May as food and electricity prices jumped, raising the odds of further interest rate hikes by the central bank despite a likely recession.

Brazil’s benchmark IPCA consumer price index rose to an 11-year-high of 8.47 percent in the 12 months through May, well above the government’s 4.5 percent inflation target, statistics agency IBGE said.

Month-on-month, consumer prices rose 0.74 percent from April, up from an increase of 0.71 percent in April and above market expectations of 0.59 percent. Higher food prices were the biggest surprise, since May is customarily a month in which food price inflation eases, economists said. Bad weather propelled tomatoes and onion prices more than 20 percent higher.

Electricity rates also spurred inflation in May, IBGE said, climbing more than 10 percent in coastal cities such as Recife and Salvador.

Brazil’s already-elevated inflation has accelerated while the economy tumbles, costing hundreds of thousands of jobs in recent months.

Economists widely see the economy sliding into recession this year as policymakers curb spending and raise interest rates.

At 13.75 percent, the central bank’s Selic rate is the highest benchmark interest rate among the world’s 10 largest economies.