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In Brazil Inflation Falls, Unemployment Rises, Real Zooms Up 26%

Street vendors in Porto Alegre, Brazil The inflation index in Brazil fell to a seven-month low in February mitigating concerns about an increase in interest rates to keep prices under control, which has been one of the driving forces of the administration of Brazilian President, Luiz Inácio Lula da Silva.

Consumer, construction and wholesale prices, as measured by the IGP-M, rose 0.53% in February compared with a 1.09%, reported the Getúlio Vargas Foundation (FGV). The February rate was the lowest since a 0.28% climb in July.

The Brazilian central bank halted its longest cycle of monetary easing last October as policy makers sought to better gauge whether an inflation pickup was temporary. Annual inflation as measured by the benchmark IPCA index surged from an eight-year low of 2.96% in March 2007 to 4.56% last month.

According to the report from the FGV, rising wholesale and consumer food prices, which fueled inflation in previous months, decelerated in February. Wholesale agricultural prices rose 0.23% in February, down from 2.31% in January. Consumer food prices rose 0.21% in February compared with a 2.25% jump a month-earlier.

In a separate report by IBGE, the Brazilian statistics office, unemployment rose to 8% in January from a six-year low of 7.4% in December. The increase was expected as companies shed temporary Christmas staffing. Still, unemployment in January was lower than the 9.3% rate a year-earlier.

Meantime the real ended the week at 1.6762 per dollar, the strongest since May 1999. The currency has gained 26% in the past 12 months, the biggest increase among the 16 major currencies against the dollar.



  • Show Comments (5)

  • João da Silva

    [quote]i like chickens. i think they’re hot smilies/kiss.gif[/quote]

    Not worth commenting 😉

  • sasha

    i like chickens. i think they’re hot :-*

  • João da Silva

    [quote]Brasil will have a delicate balance to maintain, its increasing real value will hurt tourism and other sectors. [/quote]

    The “strengthening” of Real started hurting the export oriented manufacturing sectors right from the end of 2006. One example I can cite is the leather goods industries in the state of RS. It took a long time and hard work for them to develop overseas markets and now they were forced to close the industries and lay off the workers last year.

  • ch.c.

    “soon begin to affect the tourist trade and drive the real estate developments aimed at europeans .. into failure ? ????
    – Brazilian real estate is still VERY VERY cheap…for Europeans.
    – funny your “tourist trade” statement because not only your “trade account” is already in….DEFICIT FOR YEARS, but will go increasing the stronger the Real will be. !!! More Brazilians will travel abroad for vacations due to the high BRL and less foreigners will chose Brazil !
    And if you look at your stats, your incoming tourists account goes up….ONLY because your filthy government measure it in US$….but is down year after year when measured in your currency !!!!
    On top of that, overall, Europeans have no reasons to retire or live permanently in Brazil….unless they are in love or married with a Brazilian !

    Let me explain :
    – In Brazil a retired foreigner must pay his tax on his worldwide income/assets !
    – In Philippines,Thailand, Malaysia, Vietnam, Santo Domingo just to name a few within many more countries, expats are NOT subject to income tax on their foreign income or assets.
    Thus increasing their buying/comsuming power by NOT being subject to tax..
    Another example is Morocco.They negotiate a very low tax rate only on the foreign money you import. And nothing else !

    Hopefully you understand why so many Europeans, Americans, Japaneses, South Koreans and now even Russians prefer other countries for retirement rather than Brazil… !!!!! Argentina has the same tax laws than Brazil.
    But for Americans expats with a pension benefit…it becomes more expensive by the day due to their currency devaluation wherever they live outside of the USA !

    The simple question is why should we pay taxes when so many countries open their arms without taxing you anything…and with as much sun and many beaches than Brazil ???????????
    And finally, there is also the security and safety reasons…much better elsewhere than Brazil.

    By wishing to kill the chickens…you get neither their meat nor their daily eggs !
    😀 😉 😀 😉

  • Trillium

    Will the growth in value of the Brasilian real soon begin to affect the tourist trade and drive the real estate developments aimed at europeans .. into failure ?

    Brasil will have a delicate balance to maintain, its increasing real value will hurt tourism and other sectors.

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