Brazil’s annual inflation rose to 4.14% in March, driven largely by surging fuel prices linked to a global energy shock triggered by the ongoing Middle East conflict, official data showed Friday.
According to the Brazilian Institute of Geography and Statistics (IBGE), gasoline prices increased by 4.59% during the month, pushing up transport costs and contributing significantly to overall inflation. Diesel, widely used in freight transport, rose 13.9%, with Brazil importing nearly 30% of its diesel supply.
Food prices also climbed by 1.56%, as higher transport costs filtered through supply chains.
“In certain sub-categories — particularly fuels — the impact of uncertainties in the international landscape is already being felt,” said IBGE manager Fernando Goncalves.
The price pressures have been linked to global oil market disruptions after Iran reportedly restricted shipping through the Strait of Hormuz, a key route for global energy trade, amid the US–Israel conflict in the region.
Economists at Capital Economics said the inflation uptick was “driven almost entirely by the energy shock,” noting the spillover effects of rising global oil prices on domestic costs in Brazil.
Brazil’s central bank had earlier cut its benchmark interest rate in March for the first time in nearly two years, lowering it to 14.75% from 15%, as policymakers weighed easing inflation trends.
Analysts suggest the monetary easing cycle could continue if global energy prices decline, particularly under a fragile US–Iran ceasefire scenario.
In response to rising fuel costs, President Luiz Inacio Lula da Silva recently signed a package of measures, including diesel subsidies and support for the aviation sector, aimed at easing pressure on consumers and transport operators.
Diesel prices at the pump have risen nearly 24% since the conflict began in late February, according to Brazil’s National Petroleum Agency.
The inflationary pressure comes as Lula prepares for a re-election bid in October, where he is expected to face strong competition from Senator Flavio Bolsonaro, son of former president Jair Bolsonaro.
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