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.

AgroGalaxy Participacoes SA, a Brazilian agricultural supplies retailer that sought creditor protection last year, plunged the most in more than a month as its third-quarter loss widened because of expenses related to the bankruptcy process, Bloomberg News reported. The loss was 1.6 billion Brazilian reais ($265 million), roughly 18 times its loss a year earlier, the company said Monday. AgroGalaxy had postponed the earnings release twice.

Azul and Gol, two of Brazil's largest airlines, are moving a step closer to a sweeping merger that would create a dominant carrier in Latin America's No. 1 economy, a securities filing showed on Wednesday. The union of the two companies, which follows months of talks and market speculation, would hold roughly 60% of the domestic market, far surpassing the local unit of Chile-based LATAM Airlines.

Brazil’s economic activity barely grew on the month in November as central bankers try to tame consumer demand by raising interest rates, Bloomberg News reported. The central bank’s economic activity index, a proxy for gross domestic product, ticked up 0.1% from the month prior, slightly above the forecast for no change from economists in a Bloomberg survey. From a year before, the gauge grew 4.11%, according to a report published Thursday. The bank also revised October’s monthly growth to 0.09% from 0.14% before.

Brazilian airline Gol released a revised five-year strategic plan on Wednesday as it prepares to exit chapter 11 bankruptcy proceedings, saying that the new forecasts would serve as a base for its reorganization, Reuters reported. Gol said in a securities filing that it expects to emerge from chapter 11 in May, and sees its net leverage "substantially improving" going forward as it rebuilds its network and returns to "normal levels" of core earnings by next year.

Brazil’s industrial output fell for the second straight month, signaling that tight financial conditions are taking toll on the credit-dependent sector as the central bank prepares to take interest rates even higher, Bloomberg News reported. Production declined 0.6% in November from the month prior, just less than the median estimate of a 0.7% drop from analysts in a Bloomberg survey. Industry gained 1.7% from a year earlier, the national statistics agency reported Wednesday. Read more.

Brazil's government said on Friday it has reached deals with two of the country's largest airlines, Gol and Azul, to settle some pending tax obligations totaling 7.5 billion reais ($1.22 billion), Reuters reported. The government has provided the carriers with significant discounts and allowed them to make installment payments. The deal may provide financial relief to the companies. Latin American airlines have been facing financial hurdles in the wake of the COVID-19 pandemic and were forced to restructure obligations as they struggle with high debt loads.

Brazilian assets finished the year lagging all major peers, with the real posting its biggest slump since the pandemic shock of 2020 amid mounting skepticism over President Luiz Inacio Lula da Silva’s commitment to fix a ballooning budget deficit, Bloomberg News reported. The real weakened 21% against the US dollar this year, the worst among 31 major currencies alongside Argentina’s tightly controlled peso. Losses accelerated in November after a long-awaited fiscal package underwhelmed investors.