Brazilians Expecting Pro-Jobs Package from Government This Week

Brazilian Zero Hora's newsroom In Brazil inflation was down in November amid a slowing economy and dwindling consumer confidence reinforcing the view that the Brazilian Central bank (BC) has room to hold interest rates next week for the second straight month. The Brazilian government is also expected to make further announcements to prop the economy and jobs.

The benchmark IPCA consumer price index rose 0.36% in November, slowing from a 0.45% increase in October, the government's statistics agency IBGE said on Friday.

Food and beverage prices which had jumped 0.69% in October and have been pressuring inflation all year long increased 0.61% in November. Clothing prices also rose less last month, climbing 0.71% after a 1.27% jump in October. Transport costs edged 0.02% lower in November, dragged down by plummeting used car prices, which fell 2.61%.

Personal expenses rose 0.5% following a 0.68% increase in October as consumers, worried about the slowing economy, sought to rein in spending.

In the 12 months through November, the IPCA rose 5.61% compared with a 6.41% increase in the year through October according to the IBGE.

Brazil's central bank, which uses the IPCA as a guide when setting interest rates, has a 4.5% annual inflation target for 2008, 2009 and 2010 with a tolerance band of plus or minus 2 percentage points.

The November inflation index was announced on the week when Brazil's currency slumped to its lowest close against the dollar in more than three years, despite central bank support. The real floated at 2.475 per dollar, even after Brazil's central bank offered dollars in auctions on the spot market to supply liquidity.

The real has shed more than a third of its value since hitting a nine-year high in August as foreign investors have yanked money from emerging markets like Brazil, leading to a scarcity of dollars. Net outflow of US dollars from Brazil totaled US$ 7.16 billion in November versus US$ 4.64 billion in October, central bank data shows.

This week also opens with expectations that the government plans to unveil new measures to cushion the blow of the global economic downturn and take steps to prevent a spike in unemployment, two top officials anticipated last Thursday.

The comments come the same week that mining giant Vale cut 1,300 jobs and Volvo, the world's number two truck maker, laid off 430 workers at its truck plant in the southern city of Curitiba.

"We will continue to generate jobs and to take measures to prevent the economy from stalling," Finance Minister Guido Mantega told reporters in Brasí­lia. Brazilian President Luiz Inácio Lula da Silva's chief of staff, Dilma Rousseff, also anticipated the government would do all in its power to avoid rising unemployment.

"This is a key issue for the government, not to allow a fall in employment which will compromise all that we've achieved until now," she told reporters before meeting with union leaders in Brazilian capital Brasí­lia.

With industrial production slumping, bank lending contracting and business confidence at its lowest in more than three years, the Brazilian government is under pressure to do more to shore up the economy especially since governments in Europe and United States have already announced their own economic stimulus packages.

Mercopress

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