Rio, May 30, 2003 (Agência Brasil - ABr) - The coordinator of Economic Analyses of the Getúlio Vargas Foundation (FGV), Salomão Quadros, affirmed, yesterday (29), in Rio that the IGP-M in May, which indicated a 0.26% deflation, reflected three components that were picked up in strength by the IPA - Wholesale Price Index (-1.11%): the dollar; fuels, which fell around 4% during the month, and the agricultural harvest, which caused a decline in many agricultural prices. This month's deflation is the largest since May, 1999, Quadros revealed. He considered it, however, a momentary deflation, following many increases in the IPA due to the exchange rate.

On the other hand, the IPC (Consumer Price Index) continued to demonstrate a considerable elevation (0.83%), even though it presented deceleration in comparison with April, when it rose 1.28%.

The FGV economist judged that the tendency is for the IGP-M to continue declining in June, although he does not forecast a continuation of deflation. "The deflation will probably not be repeated, or it will be slighter," he assessed. Quadros believes that the IPA, which has a weight of 60% in the final index, should remain very low for the time being, and he cautioned that the behavior of inflation in coming months will depend upon many factors, such as prices in the period between harvests. (DAS)