Brazil Says Inflation Hit Monthly High of 19.5%

The government has announced that inflation will hit a one-month record of 19.5% when all the figures are in for April, putting the annual rate at close to 800% as rumors of an impending upheaval swept Latin America’s biggest nation Friday.

Persistent, unconfirmed rumors of bank closures, new price freezes and a military takeover prompted President Jose Sarney to deny that he planned to resign.

“We face serious political and economic difficulties, but nothing will make me lose my sense of duty,” Sarney said in his weekly nationwide radio address.

Finance Minister Luiz Carlos Bresser Pereira had predicted Thursday night that the country’s April inflation would hit 19.5%, a record high for Brazil.

Brazil’s previous record inflation was in January, when the cost of living rose 16.8% during the month. In March, it was 14.4% and in February 13.9%.

Recession Predicted

At those rates, economists predict Brazil’s annual cost of living would soar by about 800% and put the country into a recession.

The government set the return on a treasury note, equivalent to a U.S. Treasury bill, at 37% a month.

Bresser, who became finance minister just a week ago, denied persistent reports that the government was readying a price freeze to stave off the economic crisis.

Bresser said that he was aware of the rumors and reports making the rounds in government offices, which included rumors that Sarney would resign, that bank closings were planned and that a military coup was in the offing.

The rumors caused prices on the stock exchange in Sao Paulo, Brazil’s main industrial center, to fall and caused the dollar to jump from 32 to 35 cruzados on the black market. The official rate is 28.6 cruzados to the dollar.

Sarney, 57, is Brazil’s first civilian president after 21 years of military rule. He came to office in April, 1985, as the vice president of Tancredo Neves, the president-elect who died before taking office.