Food and Fuel Stir Up Inflation in Brazil

December’s inflation in Brazil as measured by the Broad Consumer Price Index (IPCA) amounted to 0.86%. The rate ended up slightly higher than what the market predicted.

In November the IPCA was 0.69%. These data were released January 14 by Brazilian Institute of Geography and Statistics (IBGE).


For 2004 overall, the IPCA came to 7.60%. This index is used as a parameter by the government in setting its targets for inflation.


Since last year’s target was 5.5%, with a 2.5% tolerance interval (plus or minus), inflation in 2004 was slightly below the 8% upper limit established by the National Monetary Council (CMN).


The major factor that led to an acceleration of inflation in December was rising fuel prices. Gasoline prices rose 5.06%, and alcohol prices were up 2.81%.


Urban bus fares also contributed to December’s inflation, with an increase of 1.60%.


Food products, which had been keeping inflation down, rose 0.65% in December, after a 0.01% deflation in November.


Translation: David Silberstein
Agência Brasil

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