Brazil's consumer prices showed a deceleration in March compared to the previous month, fueling expectations of monetary easing and sending the local stock market higher. Prices as measured by the benchmark IPCA index rose 0.71% last month, down from February's gain of 0.84% and below the consensus of 0.78%.
The year-on-year inflation rate came in at the lowest point since January 2021, at 4.65%, down from the 5.60% recorded in the previous month.
In a statement for the International Monetary and Financial Committee meeting, Brazil Finance Minister Fernando Haddad said that the central bank's tight monetary policy stance, which has kept interest rates at a six-year high of 13.75% in the last meeting, has started to bring inflation down.
"After peaking at above 12% in early 2022, the inflation rate has halved and is comparatively lower than in most advanced economies," Haddad said.
He argued that there will be space for rate cuts with "increased confidence in the country's fiscal framework and a fiscal consolidation path consistently affecting inflation expectations."
Despite the better-than-expected figures, gasoline
prices still weighed on consumers' pockets, rising 8.33% in
March, after a partial return of federal taxes that were exempt
in the last few months.
On the other hand, prices in the food and beverages category grew only 0.05%.
Brazil's Bovespa stock index soared 3.7% in
early afternoon trading, while the real strengthened 1.2%
against the dollar.
(Reporting by Peter Frontini; Editing by Mark Porter)
