Brazil inflation

PIB = GDP, IPCA = CPI. Black lines = 2015, red lines = 2016. Source: central bank

The task facing Brazil’s new economics team came further into focus on Monday morning with inflation expectations rising and the consensus on economic growth falling, both for the fourth consecutive week. The central bank’s latest weekly survey of market economists has GDP rising just 0.13 per cent this year, down from the 0.55 per cent expected four weeks ago, while consumer price inflation is seen ending the year at 6.99 per cent, up from 6.53 per cent four weeks ago and some way beyond the upper limit in the government’s target range of 4.5 per cent plus or minus two percentage points. Read more

Consumer price inflation in Brazil was 6.4 per cent last year, the country’s statistics office said on Friday. This was in line with expectations but it will nevertheless have provoked sighs of relief in Brasília. While inflation was well above the government’s target of 4.5 per cent, it did at least remain within its tolerance band of 2 percentage points, so the central bank will not have to write to the president to explain its failure to do its job.

It is yet another case, in Brazil, of things being good only because they are not outright bad. Read more

There are plenty of misconceptions about Brazil. Many Brazilians have no interest in football, can’t stand samba and would rather spend the weekend in a shopping centre than on the beach. They certainly don’t speak Spanish. When it comes to the economy, though, perhaps one of the biggest myths about the country is that Brazil has an inflation target of 4.5 per cent.

Officially, the Brazilian central bank’s annual inflation target has been 4.5 per cent ever since 2005. However, in reality, inflation data show Brazil has actually been working with a target closer to 6 per cent for the past few years. Read more

As Brazil’s polling day draws closer, another data point emerged on Friday for the voters’ consideration: consumer price inflation is back above the upper limit of the government’s target range and shows no sign of falling back soon.

The IBGE, Brazil’s statistics office, said CPI in the month to mid-September was 0.39 per cent, bringing the accumulated rate over the past 12 months to 6.62 per cent. That was above the consensus forecast of 0.35 per cent for the month, according to Bloomberg. Read more

Brazilian inflation broke the upper bound of the government’s target range in the first half of July, reaching an annual rate of 6.51 per cent according to the statistics office IBGE. It looks set to stay high until the country’s elections in October, putting further pressure on the candidacy of Dilma Rousseff, seeking re-election as president.

The half-monthly figures presented by the IBGE are not seasonally adjusted. But Neil Shearing at Capital Economics reckons they show a clear tendency to take annual inflation to 6.6 per cent for the full month, up from 6.5 per cent in June. Read more

Brazil’s president Dilma Rousseff is considering replacing her finance minister Guido Mantega, with the head of the central bank, Alexandre Tombini, reports Valor Econômico, the business newspaper.

Mantega has been criticised for presiding over a period of low economic growth, leading to pressure on Rousseff, who will contest elections for a second term in October, to replace him and other members of her economic team. Read more

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. Read more

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.

 Read more

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. Read more

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”Read more

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. Read more

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 yearsRead more

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. Read more

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. Read more

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.” Read more

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. Read more

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. Read more

“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. Read more

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. Read more

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 centRead more