Brazil's mid-April consumer prices undershoot forecasts ahead of rate decision

SAO PAULO, April 28 (Reuters) - Brazil's inflation accelerated less than expected in early April despite a jump in fuel and food prices, official data showed on Tuesday, reinforcing market expectations that the central bank will deliver a fresh interest rate cut later this week.

Annual inflation as measured by the IPCA-15 index came in at 4.37% in the period, statistics agency IBGE said, up from 3.90% a month earlier but below the 4.49% forecast by economists in a Reuters poll.

Brazil's central bank is widely expected to cut its benchmark interest rate by 25 basis points to 14.50% on Wednesday, after launching an easing cycle last month as policymakers balance inflation pressures and a sluggish economy.

The bank targets inflation at 3%, plus or minus 1.5 percentage points.

"We think that the easing in underlying price pressures and very high real interest rates should give the central bank room to deliver another 25bp cut," Capital Economics' senior emerging markets economist Kimberley Sperrfechter said.

In the month to mid-April, IBGE said, consumer prices were up 0.89%. The rise was the steepest for the IPCA-15 index since February 2025, but still undershot the 1.0% increase expected in the Reuters poll.

The monthly results were mainly driven by higher food, beverage and transportation prices, the agency added, with fuel costs jumping amid rising global oil prices related to the Middle East conflict. (Reporting by Gabriel Araujo; Editing by Aida Pelaez-Fernandez)