The inflation projection for 2024 is increased from 4.10% to 4.12%; the percentage is above the stipulated target
Financial market agents increased their projection for inflation in 2024 from 4.10% to 4.12%. The indicator is measured by IPCA (Broad National Consumer Price Index). The BC (Central Bank) released the estimate of the Focus Bulletin this Monday (5.Aug.2024). Here is the full of the report (PDF – 782 kB).
This is the third increase in three consecutive weeks after nine weeks of increases. The percentage is above the inflation target of 3%, but below the maximum tolerance range of up to 4.5%. For 2025, the forecast increased from 3.96% to 3.98%.
The estimate for GDP (Gross Domestic Product) in 2024 increased from 2.19% to 2.20%. However, growth is not expected for 2025, which fell from 1.94% to 1.92%.
There was no change in the projections for the basic interest rate, the Selic. It is maintained at 10.50% in 2024 and 9.5% in 2025.
Analysts consulted by the Central Bank also maintained the dollar exchange rate at R$5.30. By 2025, the US currency is expected to rise from R$5.25 to 5.30.
HOW INFLATION WORKS
Inflation rates are used to measure price changes. In other words, how much money is really worth. In short, a product that used to cost R$100 now costs R$110 if inflation increases by 10%.
The Central Bank’s role is to keep Brazil’s inflation within the target range (3%) at the end of each year. One way to do this is by raising interest rates.
Higher interest rates control inflation because more expensive credit slows down consumption and production. As a result, prices tend not to rise as quickly.
Read more about inflation in the country:
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