Brazil’s Financial Market Expecting Inflation Below 5% in 2006

The first "Focus Bulletin" of the year, released today by Brazil’s Central Bank (BC), indicates that Brazilian financial analysts expect a Broad Consumer Price Index (IPCA) of 5.68%, for 2005.

The official number will be released next Monday, January 13, by the Brazilian Institute of Geography and Statistics (IBGE).

According to consultants, last year’s inflation was above the 5.1% goal. For this year, the bulletin foresees that the 4.50% inflation goal will be attained, in spite of the increased forecast (from 4.5% to 4.6%) for adjustments in administered prices (fuel, electricity, phone, education, water, etc.), in comparison to the previous bulletin.

The projection for the Consumer Price Index, measured by the Institute of Economic Research Foundation (IPC-FIPE), also went up, from 4.5 to 4.55%, in the city of São Paulo.

According to the economists consulted by the BC, December inflation was 0.35%, but prices tend to slightly rise to 0.40%. They also predict an increase in wholesale prices during 2006.



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