Brazil's inflation rate accelerated more than expected in October, officials said Wednesday, highlighting the Central Bank's difficulty reining in prices as Latin America's biggest economy struggles with a plunging currency and stalled pandemic recovery.
The annual inflation rate came in at 10.67 percent in October, up from 10.25 percent in September, said the national statistics institute, IBGE.
The monthly inflation rate meanwhile came in at a 19-year high of 1.25 percent, worse than the one-percent rise analysts had forecast.
Fuel and food prices were the main drivers of the increase, IBGE said.
Like many countries, Brazil is struggling with rising prices as pandemic-related shortages hit global supply chains.
But few central banks have acted as dramatically as Brazil's to curb inflation. It raised the benchmark interest rate by a whopping 150 basis points on October 27, to 7.75 percent – its sixth straight hike – and said another increase of the same magnitude was likely in December.
The bank's monetary policy director, Bruno Serra, said in a recent interview that an even bigger response may be needed.
"If it's necessary to increase [the rate] by more than 1.5 percentage points at the next meeting, we'll do that," he told Japanese financial daily Nikkei.
The new figures may add to that argument.
In addition to global price pressures, Brazil is dealing with a plummeting currency that is making imports more expensive.
The real lost 3.9 percent against the dollar in October, driven down by investor jitters fueled by President Jair Bolsonaro manoeuvring to circumvent Brazil's constitutional spending cap and fund a large new welfare program.
The moves come as the far-right leader gears up to seek reelection next October, badly trailing former left-wing president Luiz Inácio Lula da Silva in the polls -- which has heightened political uncertainty.
Fuel prices in Brazil increased by 3.21 percent in October, transportation by 2.62 percent and food by 1.17 percent, IBGE said.
Rising food prices have hit the poor especially hard.
Annual inflation is well above the Central Bank's target range of 3.75 to 5.25 percent.
Brazil's pandemic recovery has meanwhile stalled. After growing a promising 1.2 percent in the first quarter of the year, the economy contracted by 0.1 percent in the second.