Kelly Oliveira        Reporter Agência Brasil

Brasília - According to the executive manager of the Economic Policy Unit at the National Confederation of Industry (“CNI”), Flavio Castelo Branco, inflation in Brazil continues at a worrisome level and requires attention.

Yesterday, June 7, the government statistical bureau (“IBGE”) reported that inflation, as measured by the Broad Consumer Price Index (“IPCA”), rose 0.47% in May, compared to prices in April. That was less than prices rose in April, compared to March (up 0.77%).

However, the cumulative increase of the IPCA for the last twelve months has reached 6.55%, which is above the government’s official inflation target of 4.5%, give or take 2 percentage points, for a ceiling of 6.5%.

Castelo Branco says that inflationary pressure from prices of commodities, that are set on the international market, seems to have been overcome. But he sees a threat from high domestic prices and adds that he does not expect a quick reduction of inflation – not for the next 12 months.

”There is [inflationary] inertia in some segments, especially services and prices that are “administered” by the government (“preços indexados”). Those are areas that require a lot of attention,” he declared.

He went on to say that the economy has responded to some extent to recent increases in the benchmark interest rate (“Selic”) and shows that the Monetary Policy Committee (“Copom”), the Brazilian Fed, could let up and interrupt the cycle of Selic increases at the next Copom meeting that begins today, June 8.

“Expectations are not for a quick reversal of monetary policy, that is, a reduction of the interest rate in the short term. But the economic situation in Brazil is such that the increases could be interrupted,” he concluded.

Allen Bennett – translator/editor The News in English

Link - Inflação continua em patamar elevado, avalia CNI