Analysts covering Brazil’s economy raised their forecast for 2013 inflation for the sixth straight week, as price pressures remain strong amid flagging growth.
Brazil’s consumer prices will rise 5.71 percent this year, according to the median estimate in a central bank survey of about 100 analysts published today. Analysts had forecast inflation of 5.68 percent the previous week.
President Dilma Rousseff’s administration is working to combat a mix of slowing growth and rising prices known as stagflation. The central bank estimates that Brazil’s economy expanded 1 percent last year, down from 2.7 percent in 2011, while annual inflation has run above the bank’s target for the past 29 months. To spur growth and tame price increases, the government has cut taxes on payrolls, consumer goods and electricity, pressured banks to boost lending and lowered the benchmark interest rate to a record 7.25 percent.
The measures have failed so far to slow inflation. Prices in January jumped from the month before by the most in almost eight years, and the annual increase reached 6.15 percent. Inflation is at a high level that requires attention, the central bank said on Feb. 7. Traders increased bets that policy makers will raise the Selic rate this year after the bank issued its statement. The bank targets inflation of 4.5 percent, plus or minus two percentage points.
Analysts in the survey lowered their forecast for economic growth this year to 3.09 percent from 3.10 percent the previous week and raised their prediction for growth in 2014 to 3.8 percent from 3.7 percent.
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