Brazil: Inflation broadly unchanged in July
August 8, 2018
Consumer prices increased 0.33% in July over the previous month, significantly below June’s 1.26% rise. June’s result had marked the sharpest increase since January 2016 due to goods shortages caused by the truckers’ strike. The reading, however, came in above market expectations of a 0.27% increase.
Lower price pressures were seen in all subcategories of the index as the effects of the strike abate. However, elevated prices for electricity prevented a sharper slowdown. Low rainfall has hurt hydropower generation in recent weeks, driving electricity prices up.
Inflation inched up from 4.4% in June to 4.5% in July, the highest reading since March 2017. Inflation is at the Central Bank’s target of 4.5% plus or minus 1.5 percentage points. Annual average inflation rose from 2.9% in June to 3.0% in July.
Brazil Inflation Forecast
Panelists participating in the LatinFocus Consensus Forecast see inflation closing 2018 at 4.0%, which is unchanged from last month’s forecast. For 2019, the panel expects inflation of 4.3%.