Brazil

Brazil inflation edged down at the start of the year, as one-time energy credits provided consumers temporary relief from simmering price pressures, Bloomberg News reported. Official data released Tuesday showed consumer prices rose 4.56% from a year earlier, just under the 4.58% median estimate in a Bloomberg survey of economists and down from December’s pace of 4.83%. On the month, they increased 0.16%. The central bank is planning to take the benchmark Selic to 14.25% next month, marking its third-straight full-point hike, to bring down prices.

Brazil analysts revised up 12-month inflation expectations to further above the central bank’s goal, even after policymakers increased the benchmark interest rate by a full percentage point last month and pledged another hike of the same magnitude in March, Bloomberg News reported. Consumer prices are forecast to rise 5.87% in the 12 months, compared with 5.74% in the previous report, according to a weekly survey of economists published on Monday.

Brazil’s central bank said annual inflation will run above the tolerance range for the next six months, as food prices rise significantly and services costs remain elevated despite aggressive interest rate hikes, Bloomberg News reported. There will be a target breach with June 2025 inflation under the new framework, central bankers wrote in the minutes to their Jan. 28-29 policy meeting, when they stuck with prior guidance and lifted the Selic to 13.25%.

LATAM Airlines said on Friday it was still too early to discuss potential impacts of a planned merger between its two largest rivals in top market Brazil, but voiced trust in antitrust watchdog CADE to put in place mitigation measures, Reuters reported. "What we do not want is a more concentrated market, with fewer options for passengers, higher prices and less growth," LATAM's head in Brazil, Jerome Cadier, told reporters in an earnings call.

Brazil’s central bank lifted its interest rate by a full percentage point for the second meeting and said the board will do the same at the next decision while leaving their policy options against inflation open thereafter, Bloomberg News reported. Policymakers raised the benchmark Selic to 13.25% in an unanimous vote late Wednesday, as expected by all economists surveyed by Bloomberg and a vast majority of traders in the options market. The monetary authority has increased borrowing costs by 2.75 percentage points since September.

Brazil reached a record high for bankruptcy protection filings in 2024, with 2,273 companies seeking judicial relief, according to data from Serasa Experian. This figure marks a 61.8% increase from 2023 and is 22% higher than the previous peak in 2016, which saw 1,863 filings, Valor International reported. Experts predict this trend will worsen, with both 2025 and 2026 expected to surpass last year’s numbers due to a more challenging economic outlook.

A planned merger between Brazilian airlines Gol and Azul would strengthen the sector and prevent either company from failing, Brazil's ports and airports minister told Reuters, giving the potential move a key government nod, Reuters reported. Azul and Abra, the majority investor of Gol and Colombia's Avianca, announced earlier this month they had signed a non-binding memorandum of understanding with the intent of combining their businesses in Brazil.

Brazil’s annual inflation slowed less than expected in early January despite a drop in energy costs, highlighting the challenges facing policymakers as they prepare to raise the interest rate again next week, Bloomberg News reported. Official data released Friday showed consumer prices rose 4.5% from a year earlier. On the month, they increased 0.11%. The central bank has pledged to deliver its second straight interest rate hike of 100 basis points next week — which would lift the benchmark Selic to 13.25% — as policymakers maneuver to control inflation.

A plan to merge two of Brazil's top airlines to create a dominant carrier will likely win regulatory approval as a government push for a financially healthy sector outweighs concern about restricted competition, experts and lawyers told Reuters. A floated combination of Gol and Azul formalized with a memorandum of understanding last week, would give the new firm overwhelming control over the country's domestic market. But both have faced financial turbulence since the pandemic, along with Brazil's current No. 1 carrier, LATAM Airlines' local unit.

Global airlines are in talks with Gol to invest in the Brazilian airline, which is undergoing Chapter 11 bankruptcy proceedings in the U.S., local newspaper Valor Economico reported yesterday, according to Reuters. The report mentions U.S.-based companies United Airlines and American Airlines, as well as European firms Air France-KLM, International Airlines Group and Lufthansa Group among the groups in talks with Gol.