BRASILIA: Brazil's annual inflation rate probably fell slightly in January from a 12-year high, a Reuters poll showed on Friday, fueling hopes that price rises will finally start to ease after massive interest rate hikes and a deepening recession.
Inflation as measured by the benchmark IPCA price index likely stood at 10.52 percent in the 12 months through January, down from 10.67 percent at the end of 2015, according to the median of 24 forecasts in the survey.
Statistics agency IBGE publishes the January inflation figures on Friday at 9 a.m. local time (1100 GMT). Estimates ranged from 10.20 to 10.61 percent.
Brazil's inflation soared last year after President Dilma Rousseff raised taxes and electricity rates to plug a growing budget deficit. A steep drop in the exchange rate has also raised prices in recent months, as investors fret over a deepening political crisis and recent credit downgrades.
High inflation has been particularly painful for the 1.5 million Brazilians who lost their jobs over the past year, in what is expected to be the country's deepest recession in more than a century. The price increases were much lower than previous bouts of hyperinflation, but still contributed to a sharp drop in consumer confidence and in Rousseff's popularity.
The inflation rate will probably start to ease as the effect of last year's increases in taxes in public tariffs begins to fade out, economists said. Government officials and market economists all agree Brazil's inflation will fall this year; the fundamental question for policymaking is by how much.
The central bank held off on raising interest rates from 14.25 percent last month, betting the recession will help lower inflation below 6.5 percent by December. Many economists are less confident, and project inflation far above the target for the next years if rates do not rise further.
The Selic rate has nearly doubled since 2013 from a record low of 7.25 percent.
"We are worried that the recent, more dovish shift from Brazil's central bank might mean even more inflationary pressures in the future," Morgan Stanley economists led by Luis Arcentales and Arthur Carvalho wrote in a note.
On a monthly basis, consumer prices are expected to have increased 1.10 percent, up from a rise of 0.96 percent in December, according to the median of 29 forecasts ranging from 1.20 to 0.81 percent.
Comments
Comments are closed.