Beijing (China), May 26, 2004 (Agência Brasil) - The Minister of Finance, Antônio Palocci, commented that there is no risk of renewed inflation as a result of the 4.48% increase in oil prices, which rose to US$ 41.72 per barrel. "I don't believe that we are experiencing a petroleum shock as we did in the 1970's. I think it is mostly a temporary phenomenon. There aren't elements to support the existence of a structural problem in petroleum demand or supply in the world at present," Palocci declared yesterday (25), in Shanghai, where he is participating in the World Bank conference on combatting poverty.

The Minister also affirmed that the turmoil in exchange rates and commodity prices is not enough to threaten the target for inflation, which will not be altered. "Inflation is behaving well and is the consequence of our monetary policy, which was quite serious. We are even criticized for being tough on inflation," he pointed out.

Palocci recalled that the estimate of cumulative inflation over the past 12 months is 5.26%, while the projection in March, 2003, ran around 17%. "Our monetary policy redounded in an important victory over inflation, and there is nothing in the country's economic process to worry us as far as inflation is concerned." The Minister also remarked that the forecasts made by research institutes for this year's inflation already included a provision for higher petroleum prices.

Reporter: Edla Lula
Translator: David Silberstein