Brazil: Inflation recedes in July
August 7, 2013
Consumer prices were virtually unchanged in July, rising just 0.03% over the previous month. The print, which was below the 0.26% rise recorded in June, was in line with market expectations. This was the smallest rise in three years. Price increases in housing and other sectors were offset by the government's decision to reduce transport prices following massive public protests in recent months.
Despite the small monthly price increase, annual headline inflation fell from the 20-month high of 6.7% in June to 6.3% in July. Moreover, inflation is again within the Central Bank's tolerance margin (plus/minus 2.0 percentage points) around its 4.5% target.
The Central Bank expects inflation to moderate to 6.0% by the end of this year and to ease further to 5.4% by the end of 2014. LatinFocus Consensus Forecast participants see inflation closing 2013 at 5.9%, which is unchanged from last month's forecast. For 2014, the panel sees inflation at 5.8%.
Author: Carl Kelly, Economist