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At 7.5%, Brazil’s 2004 Inflation Worse than Expected

The last Focus Bulletin market survey conducted by Brazil’s Central Bank (BC) in 2004 was released December 3 and indicates that December’s inflation, which will be announced next week by the Brazilian Institute of Geography and Statistics, will run around 0.74%.

Including this result, inflation for the year of 2004 as gauged by the Broad Consumer Price Index (IPCA) will amount to 7.47%.


Consequently, the inflation index for 2004 will exceed the 7.4% projected by the BC in its quarterly report on inflation, released last Tuesday (28), and far astray of the 5.5% central target goal set by the National Monetary Council (CMN), which also established a tolerance interval of plus or minus 2.5%.


On the other hand, the expectations of market analysts and financial institutions improved a bit in relation to future inflation.


According to the survey conducted by the BC’s Investor Relations Department, the IPCA in January should be around 0.60%, down from December’s figure.


According to the Focus Bulletin, this represents the first step for the IPCA (the index that the federal government uses as a parameter for its targets) to drop to 5.70%. This forecast still exceeds the CMN’s 4.5% target, later raised by the BC to 5.1%.


Once more, one of the factors that most contributed to inflation was the segment of monitored services and prices regulated by the government.


Translation: David Silberstein
Agência Brasil

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