Monthly inflation jumped from 0.38% in April to 0.46% in May; in the year to date, it registered 2.27%
Brazil’s inflation accelerated in May. Measured by the IPCA (Broad National Consumer Price Index), it went from 0.38% in April to 0.46% in the month. The annualized rate – which corresponds to the accumulated 12 months – increased from 3.69% to 3.93%. O IBGE (Brazilian Institute of Geography and Statistics) released the result this Tuesday (June 11, 2024). Here’s the complete of the report (PDF – 685 kB).
O Power360 showed that projections by financial market agents indicated higher annualized inflation in Brazil in May. Analyst estimates were 3.84% to 3.93% in the month, above the 3.69% recorded in the previous month.
The median was a rate of 0.46% in May. The result was above expectations.
The government Luiz Inácio Lula da Silva (PT) established, in June 2023, a target of continuous inflation at 3%, with a tolerance range of 1.5% to 4.5%. On May 22 of this year, the Minister of Finance, Fernando Haddadsaid that the goal is “very demanding”. On Friday (June 7, 2024), he stated that the government will maintain the target at this level.
May inflation will be the main reference indicator for directors of the B.C. (Central Bank) for the Copom (Monetary Policy Committee) meeting on June 18th and 19th. The meeting could mark the end of the cycle of cuts in the basic rate, the Selic, which is the economy’s base interest rate. Currently, it is at 10.5% per year.
The median projection is a cut of 0.25 percentage points at the next Copom meeting, but there are economic agents who already estimate a Selic of 10.5% by the end of 2024.
The committee cut the Selic rate for 7 consecutive meetings. The accumulated reduction was 3.25 percentage points.
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