Brazil Central Bank says inflation is high, requires attention
2013-02-07 17:54:58
Brazilian inflation is at a high level that requires attention, the central bank said in response to a report showing that consumer prices rose in January at the fastest pace in almost eight years.
The 12-month inflation rate will hover around 6% until June before slowing, Banco Central do Brasil said. In January, consumer price increases were fueled by tax increases, a currency depreciation in 2012 and food costs, according to the central bank.
Swap rates on the contract maturing in January 2014, the most traded in Sao Paulo today, posted the biggest one-day increase since Dec. 7 as traders increased bets the central bank will raise rates this year after cutting the Selic rate to 7.25 percent from 10.5 percent in 2012. The January 2014 rate rose 11 basis points, or 0.11 percentage point, to 7.46 percent as of 12:43 p.m.
Prices as measured by the benchmark IPCA index rose 0.86 percent in the month, the national statistics agency said today in Rio de Janeiro. The median estimate from 41 economists surveyed by Bloomberg was for a 0.83 percent rise. Annual inflation accelerated to 6.15 percent from 5.84 percent the previous month.
President Dilma Rousseff’s administration has cut taxes and borrowing costs to jumpstart growth that in 2012 was slower than any other major Latin American economy, and the stimulus has helped keep inflation above the central bank’s 4.5 percent target for 29 months. Brazil plans to scrap federal taxes on food staples as it seeks to slow price increases, Rousseff said earlier this week.
Today’s statement by the board followed an interview central bank President Alexandre Tombini gave O Globo newspaper, where he said inflation was at an uncomfortable level.
Food and beverages represented 23.9 percent of family budgets in 2012, and were the second-largest source of inflation after personal expenses. Food prices rose 1.99 percent in January.
Economists surveyed by the central bank forecast growth of 3.1 percent in 2013, with inflation of 5.68 percent. The bank estimates the economy grew 1 percent last year, decelerating from 2.7 percent in 2011 and 7.5 percent in 2010.