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Brazilian Inflation Goes Up. It’s 0.43% in January

Brazil's  inflation as measured by the General Index of Prices – Domestic Availability (IGP-DI) was  0.43%, in January. In December, the growth rate had been 0.26%. Data released today, February 6, by the Getúlio Vargas Foundation (FGV) show that all the three indexes that comprise the IGP-DI had an increase.

The Wholesale Price Index (IPA), responsible for 60% of the IGP-DI's composition, went from  0.11%, in December to 0.32%, in January. The Consumer Price Index (IPC), which contributes with 30% of the IGP-DI, went from 0.63% to 0,69%, and the National Civil Construction Price Index (INCC), which answers for 10% of the IGP-DI, rose 0.45% compared to 0.36% in December.

Products such as cow meat (from -4.64% to 0.17%), tomato (-15.67% to 61.54%) and cassava (-3.16% to 24.76%), all Brazilian staples, were the biggest culprits for the higher prices and inflation.

Consumer prices increases in January were influenced mainly by the higher prices of school registrations (4.31%), vegetables and legumes (-1.51% to 11.37%) and piped gas (2.74%).

As for the Construction Index Civil the raise was due to hikes in building material prices, which went from 0.31% to 0.51%, and expenditures with labor, which also raised from 0.25% to 0.32%, as a consequence of the workers salary wage hike in the city of Belo Horizonte, capital of Minas Gerais state.

The IGP-DI deals with the whole month, meaning that the collection of data is done from the first to the last day of the month. The index was devised to measure the general behavior of prices in the economy.

Consumer prices are based on outlays of families whose income vary between one and 33 minimum wages. The minimum wage in Brazil since April 1st, is 350 reais (US$ 168) a month.

Optimism

Brazilian businessmen seem more optimistic regarding the economy in 2007. They believe that both revenues and profit will increase, and are also willing to invest more.

The information is the result of a research conducted by Brazilian credit information company Serasa in January among 1,021 executives throughout the country.

The upbeat mood is a result of the economic incentives forecasted for 2007, such as the ongoing reduction of interest rates, increased wage mass, broadening of credit supply by the banking sector, increased activity in the residential construction sector among others.

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