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Inflation in Brazil could be brought back on target
14/11/2011
The latest figures have shown that consumer inflation in Brazil fell last month.
The official IPCA consumer price index fell on both the previous month and year, Brazil's IBGE Statistics Bureau has announced. The news has raised hopes that the drop will prompt the Brazilian government to bring inflation back within its target range in early 2012.
The statistics revealed that inflation grew 0.42 per cent in October, following a 0.53 per cent increase the previous month. This growth was slightly above analysts’ predictions. The figures also showed that on a 12-month rolling basis, inflation was 6.97 per cent down from September, when it stood at 7.31 per cent.
This was the first time the 12-month rolling figure fell since August last year when it dropped to 4.49 per cent. October's 12-month rolling inflation figure remained just within the government's target band. However, many fear that the inflation figure will continue to decline but are hopeful that the government will step in to bring it back on target.
Under Brazil’s programme to target inflation, the central bank must manage credit and interest rates so that inflation remains within the 2.5 per cent to 6.5 per cent range.
Neil Shearing, chief emerging markets economist at Capital Economics, told Dow Jones Newswires, "A combination of falling food inflation and slowing growth should bring inflation back to within its target range of 4.5 per cent plus or minus 2 per cent by first quarter next year, and could see it near its central target by end-2012. This in turn should calm fears about 'premature' rate cuts.”
The official IPCA consumer price index fell on both the previous month and year, Brazil's IBGE Statistics Bureau has announced. The news has raised hopes that the drop will prompt the Brazilian government to bring inflation back within its target range in early 2012.
The statistics revealed that inflation grew 0.42 per cent in October, following a 0.53 per cent increase the previous month. This growth was slightly above analysts’ predictions. The figures also showed that on a 12-month rolling basis, inflation was 6.97 per cent down from September, when it stood at 7.31 per cent.
This was the first time the 12-month rolling figure fell since August last year when it dropped to 4.49 per cent. October's 12-month rolling inflation figure remained just within the government's target band. However, many fear that the inflation figure will continue to decline but are hopeful that the government will step in to bring it back on target.
Under Brazil’s programme to target inflation, the central bank must manage credit and interest rates so that inflation remains within the 2.5 per cent to 6.5 per cent range.
Neil Shearing, chief emerging markets economist at Capital Economics, told Dow Jones Newswires, "A combination of falling food inflation and slowing growth should bring inflation back to within its target range of 4.5 per cent plus or minus 2 per cent by first quarter next year, and could see it near its central target by end-2012. This in turn should calm fears about 'premature' rate cuts.”
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