Brazil Inflation

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Brazil: Inflation stable in July

August 8, 2014

Consumer prices were virtually unchanged in July, rising 0.01% over the previous month. The print was markedly below both the 0.40% increase recorded in June and market expectations of a 0.10% rise. July’s print represented the lowest monthly increase in consumer prices since July 2010. Although only four of the nine categories that comprise the consumer price index registered price drops in July, this was enough to keep the monthly rate virtually at zero. Among the categories that tallied price increases, prices rose the most for personal items and health services. Conversely, prices for foodstuffs and non-alcoholic beverages as well as for communications registered a drop in July.

As a result of the monthly reading, annual headline inflation was stable at June’s 6.5% in July. Inflation is resting on the upper limit of the Central Bank’s tolerance margin of plus/minus 2.0 percentage points around its target of 4.5%.

The Central Bank sees inflation at 6.4% at the end of 2014. For 2015, the Bank sees inflation closing the year at 6.0%. LatinFocus Consensus Forecast participants see inflation closing 2014 at 6.4%, which is unchanged from last month’s forecast. For 2015, the panel expects inflation of 6.2%.


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Brazil Inflation July 2014 3

Note: Annual and monthly var. of IPCA consumer price index in %.
Source: Brazilian Institute of Geography and Statistics (IBGE).


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