Brazil's inflation rate slowed in January, but still came in at the highest level for the month since 2016, the government said Wednesday, underlining the country's struggles to stem surging prices.
The monthly inflation rate for January was 0.54 percent, down from 0.73 percent in December, but still the highest level in six years for the first month of the year, said the national statistics institute, IBGE.
The annual inflation rate came in at 10.38 percent, up from 10.06 percent at the end of last year and far above the Central Bank's target of 3.5 percent.
Latin America's biggest economy has been hit hard by global inflationary pressure driven by pandemic-linked supply-chain shortages, and frustration over surging prices has emerged as a major threat to far-right President Jair Bolsonaro as he gears up to seek re-election in October.
January's price increases were led by a 1.11-percent rise in food prices, which hit the budgets of poor households especially hard.
That is a demographic where Bolsonaro is aggressively courting voters, trying to gain ground in the polls against leftist ex-president Luiz Inácio Lula da Silva, the current front-runner.
Brazil's Central Bank has responded to the inflation spike by launching one of the most aggressive monetary tightening cycles in the world, raising the benchmark interest rate from an all-time low of two percent in March 2021 to 10.75 percent Wednesday.
Analysts say the inflation rate looks close to peaking, and predict the central bank will soon start slowing its rate hikes.
"The headline [inflation] rate should start falling again this month," said Olivia Cross of Capital Economics.
The central bank "still looks on course to slow the pace of tightening, as it signalled at its meeting last week," she said in a note. "We expect a cumulative 150 basis points of hikes, to 12.25 percent, at the next two meetings to finish the tightening cycle."
Brazil's economy fell into recession last year, contracting 0.4 percent in the second quarter and 0.1 percent in the third.
Analysts polled by the Central Bank forecast economic growth of just 0.3 percent for this year.