Brazil's economic activity, as measured by the IBC-Br index published by the central bank, expanded 1.3% in the first quarter compared with the previous three months, official data showed. The quarterly advance comes despite a sharper pullback in March than analysts had expected.
On a seasonally adjusted monthly basis, the IBC-Br fell 0.7% in March from February. That decline exceeded the pace anticipated in a Reuters poll, which had pointed to a 0.2% drop.
The central bank's release noted that every sector it monitors recorded declines in March. The services sector, which is the primary driver of Brazil's economy, led the downturn with a monthly contraction of 0.8%.
Looking at unadjusted annual figures, the IBC-Br rose 1.8% in the 12 months through March and increased 3.1% from a year earlier, according to the same data.
These activity numbers arrive as the central bank maintains its monetary easing cycle even as inflationary pressures have re-emerged. Officials trimmed the benchmark interest rate by 25 basis points at each of their last two meetings, bringing the Selic rate to 14.50%.
Inflation in the economy measured on an annual basis had reached 4.39% in April, above the central bank's stated target of 3%. Higher energy prices have been cited as a contributing factor to renewed inflationary pressure, with part of that energy cost rise attributed to the U.S.-Israel conflict with Iran.
The data present a mixed near-term picture: quarterly growth in aggregate activity contrasts with a notable monthly slowdown in March across all monitored sectors, and inflation is running above the central bank's target even as policy is being eased.
No additional policy moves or outcomes are reported in the data release beyond the recent rate cuts and the inflation readings provided.