Brazil: Inflation increases in June to multi-year high
July 8, 2021
Consumer prices increased a seasonally-adjusted 0.53% over the previous month in June, slowing down from the 0.83% rise recorded in May. The moderation was broad-based, with lower price pressures recorded for transportation, food and beverages, and housing. In addition, prices for health and personal care grew at a more subdued pace.
Inflation ticked up to 8.3% in June, following May’s 8.1% and far above the Central Bank’s 3.75% target for this year. June's figure marked the highest inflation rate since September 2016, with price pressures in recent months spurred by pricier electricity amid a severe drought, and higher international commodity prices. Meanwhile, the trend pointed up, with annual average inflation coming in at 5.0% in June (May: 4.5%).
June’s reading increases the likelihood of a further sizable rate hike at the Central Bank’s next policy meeting in early August. Our panelists see inflation declining by year-end amid tighter monetary policy, but staying above-target nonetheless.
Author: Hanna Andersson, Economist