Brazil inflation

Brazil’s economic growth continues to disappoint.

After data in December showed Brazil’s economy shrank in the third quarter of last year for the first time since 2009, the central bank’s IBC-Br index, a monthly proxy for gross domestic product, on Friday showed economic activity fell 0.3 per cent in November from a month earlier. Continue reading »

Brazil’s central bank has increased its benchmark interest rate by 50 basis points to 10 per cent, as expected.

Here’s the accompanying statement:

Giving continuation to the adjustment of the benchmark interest rate, which began with the meeting in April 2013, the Copom (central bank’s monetary policy committee) decided unanimously to raise the Selic rate to 10 per cent a year, without bias.

 Continue reading »

Well, it was fun while it lasted, but it seems that Brazil’s brief affair with low interest rates is over. The country’s central bank is widely expected to raise the benchmark Selic rate by 50 basis points to 10 per cent late on Wednesday, pushing it back into double digits for the first time since March of last year.

The move in itself is welcome — 12-month inflation in the month to mid-November came in at 5.78 per cent. That may be better than previous months, but it is still a long way off the country’s 4.5 per cent target.

However, Brazil’s monetary policy U-turn does raise several questions. Continue reading »

For the government, some good news. The IPCA consumer prices index for July released this Wednesday showed a 0.03 per cent rise compared with June – the smallest increase in monthly inflation in three years.

It seems finance minister Guido Mantega finally has the answer he has been looking for to the question posed by FT Brazil bureau chief Joe Leahy on Tuesday – that is whether Brazil has “overcome its recent phase of above-target inflation”Continue reading »

Could Brazil have overcome its recent phase of above-target inflation?

The IPCA consumer prices index for July, due out on Wednesday, is expected to show inflation dipped back inside the central bank’s band of 4.5 per cent plus or minus 2 percentage points. Continue reading »

Have a look at the Brazilian central bank’s website and it’s very clear what the country’s inflation target is: 4.5 per cent.

Yes, the bank has a tolerance band of 2 percentage points in either direction in case of “external supply shocks” but the target is 4.5 per cent. It’s been 4.5 per cent for the past eight yearsContinue reading »

How much would you be willing to put on the line to protest against a 20 centavo (9 cent) increase in bus fares?

One protester arrested on Tuesday night in a violent demonstration on São Paulo’s main thoroughfare, Avenida Paulista, against a 6.6 per cent rise in metro and bus fares to R$3.20 per journey is reportedly being held on bail of R$20,000. That’s 100,000 times more than the savings on tickets he was fighting for. Continue reading »

On Thursday night, the type of scenes normally associated with protests in other countries erupted in São Paulo as hundreds of people angry about a 6.6 per cent rise in metro and bus tickets set fire to garbage and broke into metro stations in Avenida Paulista, the city’s main thoroughfare. Police responded with tear gas and rubber bullets. On Friday night, the students were out again, blocking the main road through the city’s banking district, Faria Lima, and causing some of the worst traffic congestion this year.

The protests are a potent reminder that Brazilians, normally a pretty peaceable lot, really do care about one thing – inflation. Continue reading »

Imagine being in the shoes of Brazil’s central bank president Alexandre Tombini (pictured) on Wednesday. Beyondbrics pictures the scenario as something like this:

Mr Tombini was sitting at his desk reading the newspapers this morning and thinking about tonight’s regular meeting of the monetary policy committee, known as Copom. “I think I will argue for a 50 basis point rise tonight. After all, inflation is hovering near the top of our admittedly already generous range of 4.5 per cent plus or minus 2 percentage points and it’s time to show that we mean business.” Continue reading »

Brazil’s central bank is in tightening mode again, raising its policy interest rate last week after a long cycle of loosening that began in August 2011. It is worried that inflation is on the rise and less worried, apparently, about slow growth.

But behind recent numbers on inflation is another set of numbers on retail sales, which fell in February for the first time in a decade. If that turns into a trend, the very foundations of Brazil’s recent growth story will be undermined. Chart of the week takes a look. Continue reading »

Brazil’s central bank ended an easing cycle that last nearly two years by raising its benchmark lending rate on Wednesday night to tackle rising inflation.

The central bank’s monetary policy committee increased the benchmark Selic rate by 25 basis points. Continue reading »

“Federal Police tried to arrest drug traffickers smuggling narcotics under 500 kilos of tomatoes. The drug dealers fled, leaving behind the cocaine and taking all the tomatoes,” says a spoof news report circulating on the internet in Brazil.

Anyone who enters in a grocery store in the country will get the joke. The official IPCA-consumer price index registered a rise of 106 per cent in the price of tomatoes in the last 12 months. According to newspaper Folha de S.Paulo, however, the increase is in fact much greater in the nation’s financial capital, from R$3 per kilogramme to more than R$9 during the same period. Continue reading »

Brazilians often say they can organize a party like no one else. And there is some truth in it, just take a look at carnival, the biggest street party in the world. Millions of people get together in cities all over the country without invitation or advertisement. They dance, have fun, get drunk and go home… or back to their hotels, that is, if they were fortunate enough to find one. Continue reading »

Last Christmas, you could not have moved on Rua Vinte Cinco de Março, the busy market street in São Paulo, so crowded was it with festive season shoppers. Indeed, it seemed all of Brazil was out shopping last year.

So it may come as a surprise then that retail sales in Brazil in December were below expectations. Instead of the monthly increase of 0.8 per cent forecast by the market compared with November, retail sales rose only 0.5 per centContinue reading »

What? Hulk no smash currency appreciation?

Just as other countries look like they are relaunching the global currency war – see Japan – it seems like Brazil may be tiring of its long-fought and ultimately unrewarding campaign.

After some inconsistent statements, Brazil’s finance minister, Guido Mantega, signalled on Friday that the government’s attention was swinging back to inflation. Continue reading »