Market Expecting Higher Inflation for Brazil in 2006

Expectations for inflation this year in Brazil were raised slightly in the past week, as forecasts for the Broad Consumer Price Index (IPCA) rose from 4.60% to 4.68%.

This level is higher than the 4.5% projected by the government as its official target for inflation in 2006, as measured by the IPCA.

These figures appear in Monday’s, February 6, edition of the Central Bank’s weekly Focus Bulletin, based on information gathered from financial market analysts.

In light of January’s record trade surplus (exports minus imports), the analysts also raised their forecasts for this year’s trade surplus, from US$ 39 billion to US$ 40 billion.

According to the Focus Bulletin, the dollar should be worth R$ 2.35 at the end of 2006, as against last week’s prediction of a R$ 2.39 exchange rate.

Surplus

In the first week of February, with three business days, Brazil exported US$ 1.293 billion and imported US$ 1.148 billion, for a trade surplus of US$ 145 million.

So far this year the trade balance has registered US$ 10.564 billion in exports and US$ 7.475 in imports, producing a surplus of US$ 2.989 billion.

These figures were announced by the Ministry of Development, Industry, and Foreign Trade.

ABr

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