Brazil's inflation exceeded expectations in November, official data showed, ahead of a widely anticipated acceleration in the monetary tightening cycle as policymakers grapple with robust economic activity and a weakened currency.
Consumer prices measured by the IPCA index rose 0.39% in November, bringing the 12-month reading to 4.87%, up from 4.76% the previous month, said statistics agency IBGE.
That pushed inflation further beyond the upper limit of the official target range of 1.5% to 4.5%.
Economists polled by Reuters had expected inflation of 0.37% for November and 4.85% over 12 months.
According to IBGE, the largest price increases and the biggest impact on monthly inflation came from food and beverages, followed by transportation and personal expenses.
Robust Economic Activity
The data adds to a challenging outlook for Brazil's central bank, marked by robust economic activity, a tight labour market and inflation expectations climbing despite projections of a more aggressive rate path through 2025.
Fiscal uncertainties have also pushed up interest rate futures and weakened the Brazilian real, a trend that intensified following market disappointment over a long-awaited package to rein in public spending.
Policymakers are set to announce a new monetary policy decision, with markets anticipating a 75 basis-point hike that would raise the central bank's benchmark rate to 12%.
The final policy meeting of 2024 comes after a 25 basis-point hike in September, which initiated the tightening cycle, and a 50 basis-point increase in November.
