Brazil's inflation overshoots forecasts in mid-February

SAO PAULO, Feb 27 (Reuters) -

Consumer prices in Brazil rose more than expected in the month to mid-February, official data showed on Friday, but that should not prevent the central bank from kicking off a monetary easing cycle next month.

Prices as measured by the IPCA-15 index rose 0.84% in the period, statistics agency IBGE said, the steepest climb in a year and above all forecasts in a Reuters poll of economists, whose median estimate was 0.57%.

Annual inflation came in at 4.1%, slowing from 4.5% a month earlier but also topping the 3.82% expected by analysts.

Brazil's central bank targets inflation at 3%, plus or minus 1.5 percentage points, and has signaled it will start lowering interest rates in March, after holding them at a near two-decade high of 15% since mid-2025 to tame persistent inflation.

Economists said Friday's upside inflation surprise is unlikely to derail easing prospects, though it may reduce the likelihood of a larger 50-basis-point cut.

Capital Economics' emerging markets economist Kimberley Sperrfechter said much will now depend on next week's gross domestic product data and the full-month inflation data.

"As things stand, we continue to expect a 50bp cut, but the risks to this view have grown," she added in a note to clients.

The monthly IPCA-15 rise was mainly driven by higher transportation and education costs, IBGE said, citing a jump in airfare prices and annual tuition adjustments.

Pantheon Macroeconomics' chief Latin America economist, Andres Abadia, said that despite seasonal firmness in education and transportation seasonality, disinflation remains "broadly intact," which should allow for a 50-basis-point cut in March.

(Reporting by Gabriel Araujo, Editing by Louise Heavens)