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Brazil registers highest inflation in six years for 2021

·2-min read
Food and drink is one of the worst affected sectors by inflation in Brazil (AFP/NELSON ALMEIDA) (NELSON ALMEIDA)

Brazil's 2021 inflation of more than 10 percent was the highest in six years, according to official data published on Tuesday.

Last year's inflation was more than double the 2020 figure of 4.5 percent and well above the government's objective of 3.75 percent.

"It is the largest year-end rate since 2015 when it was 10.67 percent," said the IBGE statistics institute.

Price rises actually slowed in December, though, to 0.73 percent from a figure of 0.95 percent in November.

Analysts expect that trend to continue with inflation projected to end 2022 at just over five percent.

Brazil's central bank tried to ease inflation by increasing its benchmark interest rate seven times in a row 2021, reaching 9.25 percent in December.

The bank is expected to hike interest rates again in February.

Yearly inflation hit an 18-year high of 10.74 percent in November, but was back down to 10.06 percent by the end of the year.

That was slightly above the 9.99 percent forecast in the bank's weekly Focus study.

Inflation was largely driven by transport costs that rose more than 21 percent in 2021, followed by housing (13 percent) and food and drink (almost eight percent).

Those three sectors accounted for 79 percent of 2021 inflation.

"Transport was mostly affected by fuel," which rose by 47.5 percent in 2021, said Pedro Kislanov, who heads the inflationary index at IBGE.

Inflation has badly hit the disposable income of families who spend a large portion of their revenue on food.

Meat, which rose by 8.45 percent, has become unaffordable for many.

The news is another blow for President Jair Bolsonaro with a general election just nine months away and his popularity already at an all-time low.

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