Bloomberg News

Brazil Analysts 12-Month CPI Call Highest Since September

March 04, 2013

Analysts covering Brazil’s economy boosted their forecasts for 12-month inflation to the highest since September, as price pressures remain strong amid flagging growth.

Brazil’s 12-month inflation will accelerate to 5.62 percent, according to the median estimate in a central bank survey of about 100 analysts published today. Analysts had forecast 5.49 percent the previous week. The 12-month number is the highest since the survey taken Sept. 14.

Inflation in 2013 will reach 5.70 percent, the survey showed, up from 5.69 percent the previous week. The economists held their forecast for 2014 inflation at 5.50 percent.

The world’s second-largest emerging market is facing stagflation, as inflation approaches the upper limit of the central bank’s target range while the economy eked out 0.9 percent growth last year. To spark activity while cooling consumer prices, President Dilma Rousseff’s government has cut taxes on payrolls and consumer goods, lowered electricity tariffs, allowed the real to strengthen the most among major currencies this year and pressured banks to lower lending costs.

Slow Response

The world’s sixth-largest economy has been slow to respond to government measures. Economic growth last year fell to the slowest pace since 2009 on drops in agriculture and industrial production, the national statistics agency said on Friday. Price increases in mid-February exceeded economists’ forecasts for the eighth consecutive month, while annual inflation rose to 6.18 percent. The central bank targets inflation of 4.5 percent, plus or minus two percentage points.

Policy makers are expected to keep benchmark interest rate at the record low of 7.25 percent during this week’s monetary policy meeting, according to a Bloomberg survey of 28 economists. Economists in the central bank survey forecast the Selic will be at 7.25 percent at year-end, while the five analysts with the most accurate record of Selic predictions said it would rise to 7.75 percent.

Economists in the survey lowered their forecast for economic growth this year to 3.09 percent from 3.10 percent the previous week, and boosted their prediction for growth next year to 3.65 percent from 3.60 percent.

The world’s sixth-largest economy will expand 3 percent to 4 percent this year, Finance Minister Guido Mantega said on March 1. Brazil grew 2.7 percent in 2011 and 7.5 percent in 2010.

To contact the reporter on this story: Matthew Malinowski in Brasilia at mmalinowski@bloomberg.net

To contact the editor responsible for this story: Andre Soliani at asoliani@bloomberg.net


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