Inflation Accelerates, Narrowing Space for Interest Rate Cuts

Recent inflation data in Brazil indicate an alarming trend: the preliminary National Consumer Price Index 15 (IPCA-15) saw a rise of 0.7% in September, surpassing initial expectations. This outcome follows a series of price hikes in commodities and electricity, notably affected by the discontinuation of Itaipu bonus. The pressure from food prices was also significant, with notable increases in tomatoes, rice, and meats. These developments imply a reduced scope for interest rate cuts by the Central Bank, prompting economists to warn about necessary adjustments in their future projections. Particularly relevant are the impacts on service inflation and the annual IPCA-15 accumulation, which is close to the federal government's target ceiling. This continued pace could significantly affect monetary policy, as the Central Bank aims to keep inflationary pressures within healthy and sustainable economic parameters.