Brazil Inflation

Brazil

Brazil: Inflation falls in December, ends 2014 within Central Bank's tolerance margin

January 9, 2015

Consumer prices in December increased 0.78% over the previous month, which marked the largest increase since March. The print was above the 0.51% increase recorded in November, but matched market expectations. The result was driven by a broad-based increase in prices, with notable rises in the prices for transportation and clothing, as well as for, food and beverages.

Annual headline inflation ended 2014 at 6.4%, just within the Central Bank’s tolerance margin of plus/minus 2.0 percentage points around 4.5%.The result was notably above 2013’s inflation rate of 5.9%. Inflation has remained at or above the government’s tolerance margin since June and was at the forefront of the election debate last year. Following President Rousseff’s reelection in October, the Central Bank decided to raise the SELIC interest rate to the highest level in almost three years in an effort to combat the high inflation rate.

The Central Bank sees inflation closing 2015 at 6.0%. LatinFocus Consensus Forecast participants see inflation closing 2015 at 6.4%, which is unchanged from last month’s forecast. For 2016, the panel expects inflation of 5.8%.


Author: Angela Bouzanis, Senior Economist

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