Market and Government Agree: Brazil’s Inflation Won’t Top 4.5%

All signs point to a fourth straight year of declining inflation in Brazil. At least from the point of view of the market analysts polled every Friday by the Brazilian Central Bank (BC) for opinions on trends in the major economic indicators, published weekly in the bank’s Focus Bulletin.

According to the average expectation of the private sector economists, the Broad Consumer Price Index (IPCA), which provides a parameter for the government’s fiscal and monetary adjustments, should end the year at 4.50%, precisely the target set by the National Monetary Council (CMN).

This is the first time since the government adopted the policy of inflation targets that private sector forecasts coincide with the official target.

Even better, this week’s prediction represents a significant reduction in inflation projections for the year. In last week’s Focus Bulletin, the analysts’ forecasted a year-end IPCA of 4.57%.

The figures, which were published Monday, April 3,  by the BC, indicate that, even though inflation is expected to continue at a high level, around 0.47%, in April, it is expected to fall to 0.35% next month, and the tendency in the months ahead is to fall even more.

From last week’s poll to this one, the analysts lowered their estimate for inflation over the next 12 months from 4.32% to 4.25%.

Production Expansion

Industrial production expanded 1.2% in Brazil from January to February of this year. Compared with the same period last year, there was a 5.4% increase. This information was released by the Brazilian Institute of Geography and Statistics (IBGE).

The cumulative growth rate in the 12 months that ended in February was 3%, finally reversing a downward trend that began in March, 2005.

Agência Brasil

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