Brazil Inflation


Inflation rises to six-year high

In June, consumer prices added 0.15% over the previous month, which was below the 0.47% increase registered in May but exceeded market expectations that predicted a 0.07% monthly increase. The slower monthly price increase mainly reflected a decline in food prices (-0.26% month-on-month) as well as declining transport costs (-0.61% mom), due to lower gasoline prices. Despite the subdued monthly print, annual headline inflation inched up from 6.6% in May to 6.7% in June, which represented the highest rate since 2005 and exceeded the tolerance margin around the Central Bank's target of 4.5% ( 2.0 percentage points) for a third straight month. Despite mounting inflationary pressures, the Central Bank expects inflation to decline to 5.8% by the end of 2011 and to 4.8% by the end of 2012.


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