Inflation in Brazil edged higher to 4.14 percent year-on-year in March, official data showed Friday, driven by higher fuel costs amid a global energy shock prompted by the war in the Middle East.
The main driver of higher inflation was the price of gasoline, which rose 4.59 percent in March, driving up transport costs, according to the IBGE statistics agency.
Diesel essential for freight transport rose 13.9 percent. Brazil imports nearly 30 percent of the diesel it consumes.
The cost of food, which is driven upward by higher transport costs, rose 1.56 percent.
“In certain sub-categories — particularly fuels — the impact of uncertainties in the international landscape is already being felt,” IBGE manager Fernando Goncalves said in a statement.
Iran has blocked traffic through the Strait of Hormuz — a waterway used to carry a fifth of the world’s oil and gas deliveries — since the United States and Israel began bombing the country in February.
According to the Capital Economics consultancy, the rise in Brazil’s inflation “was driven almost entirely by the energy shock” worldwide.
In March, Brazil’s Central Bank lowered its benchmark interest rate for the first time in nearly two years, to 14.75 percent from 15 percent.
Capital Economics said that if global energy prices fall as hoped due to a two-week US-Iran ceasefire, this easing cycle may continue.
This week President Luiz Inacio Lula da Silva signed a package of measures aimed at curbing the rise in fuel prices, including subsidies for diesel.
At gas stations, diesel prices have climbed by nearly 24 percent since the outbreak of the conflict in late February, according to the National Petroleum Agency.
Lula’s package also provides aid to the aviation sector, where rising fuel costs are expected to trigger a sharp rise in air fares.
The 80-year-old veteran leftist is running for a fourth term in office in October elections.
Polls show he faces stiff competition from his main rival, senator Flavio Bolsonaro — son of far-right former president Jair Bolsonaro, who is in jail for an attempted coup attempt.