By Jeffrey T. Lewis
SÃO PAULO--Brazil's consumer prices in November as the weak real and stronger than normal demand for some products continued to put pressure on the cost of food.
Consumer prices increased 0.89% from October, the biggest increase in the month since 2015, the Brazilian Institute of Geography and Statistics, or IBGE, said Tuesday. Prices rose 4.31% from a year earlier. In October, prices rose 0.86% compared with September and increased 3.92% from a year earlier.
The Brazilian real lost more than 20% of its value against the dollar since the start of this year, making the imported inputs farmers use, including seeds, fertilizers and pesticides, more expensive, while the stronger dollar also makes it more profitable for Brazilian farmers to sell their products outside the country.
"Growers are passing their higher costs on to consumers now," said Mauricio Nakahodo, senior economist at Banco MUFG Brasil. "The weak real also means that more meat is going to China and to other buyers, instead of the domestic market."
The rise in prices put the 12-month inflation rate above the 4% central point of the central bank's target range for this year of 2.5% to 5.5%. The bank will hold its last policy meeting of the year on Tuesday and Wednesday, and will announce its rate decision on Wednesday evening. Economists forecast price increases will slow next year, and that the bank will leave its benchmark Selic interest rate unchanged at the current record low of 2% at its meeting this week.
Food prices rose 2.54% in November after increasing 1.93% in October, the IBGE said. The price of meat rose 6.54% in November, adding the most pressure within the food category, while the price of tomatoes rose 18.45%. Transport prices, which include the cost of fuel, rose 1.33% in November following a rise of 1.19% the previous month.
Write to Jeffrey T. Lewis at jeffrey.lewis@wsj.com
(END) Dow Jones Newswires
12-08-20 0737ET
