Brazil: Inflation approaches Central Bank?s upper tolerance margin in May
June 7, 2011
In May consumer prices rose 0.47% over the previous month, below the 0.77% increase tallied in April but matching market expectations. The reading represents the slowest monthly price increase since September 2010. The price increase was mainly driven by higher prices in the food and housing category , which were partially offset by falling transport costs (-0.24% month-on-month), reflecting lower fuel prices. As a result, annual headline inflation inched up from 6.5% in April to 6.6% in May, slowly approaching the upper ceiling of the Central Bank's target of 4.5% ( 2.0 percentage points) and marking the highest rate since July 2005. The Central Bank expects inflation to decline to 5.6% by the end of the year.