Brazilians Seem Optimistic About Their Economy But Fear Inflation

    Brazilian economy

    Brazilian economy Brazilian consumers’ Confidence Index as indicated by the latest Getúlio Vargas Foundation data shows that there was little change as the new year begins. In December 2010 it was 121.7, and in January 2011, 121.6.

    What happened in the most recent survey was a variation of one of the sub-indexes. Thus, while the percentage of those who see the present moment as “good” remained essentially the same (35.5% in December and 35.6% in January), there was an increase in the percentage of those interviewed who consider the situation “bad;” it went from 15.4% to 19.3%.

    On the other hand, positive expectations regarding the next six months showed an improvement, going from 108.9 to 109.7. This survey of expectations, like many surveys in Brazil, was based on numbers gathered in large metropolitan areas. In this case, in seven of the country’s biggest urban centers between January 3 and 21.

    Uncertainty

    In the minutes of last week’s meeting (January 18 and 19), Brazil’s Monetary Policy Committee (Copom) spelled out its recognition of the existence of “above normal” levels of uncertainty in the Brazilian economy with regard to the possible impact inflation may have.

    Copom mentioned rising risks of “a scenario in which inflation converges on the target established by the government.”

    The government’s inflation target, based on the Broad Consumer Price Index (IPCA), is 4.5%, plus or minus two percentage points. On Monday, the Central Bank released a market estimate of 2011 inflation at 5.53%.

    The members of Copom expressed concern with food prices that are subject to the strong influence of domestic and foreign supply, as well as climatic conditions that have been highly adverse in parts of Brazil at the beginning of this year.

    Other relevant risks were posed by supply and demand disorder and the problem of a lack of skilled workers that a growing economy calls for. “This is a situation where nominal salary increases may be incompatible with the growth of productivity levels,” said the Copom minutes.

    The Copom also laid out its expectations for the 2011 economic landscape and did not include any plans to raise the prices of gasoline or cooking gas. However, the minutes did mention plans to raise the bill for electricity and land telephones, by 2.8% and 2.9% respectively.

    Gasoline, cooking gas, phone and electricity prices are among so-called state administered prices.  These state administered prices weigh heavily (29%) in the formula used to calculate the Broad Consumer Price Index (“IPCA”) that the government uses as its inflation yardstick.

    Copom went on to say that the government’s primary surplus target of 3% of GDP stands, adding that the surplus target could rise to 3.1% in 2012.

    In this, the first Copom meeting of the Dilma Rousseff administration, it was also decided to raise the country’s benchmark interest from 10.75% per year to 11.25%.

    ABr

    Tags:

    • Show Comments (0)

    Your email address will not be published. Required fields are marked *

    comment *

    • name *

    • email *

    • website *

    This site uses Akismet to reduce spam. Learn how your comment data is processed.

    Ads

    You May Also Like

    A Tragedy on the Making: Hundreds of Indians in Brazil Wait by the Roadside

    Judicial countermeasures have created a serious situation that could become a tragedy involving Indians ...

    Brazilian Farmers Going Through Massive Losses

    According to the vice president of the Federation of Agriculture in the state of ...

    Brazilian teacher

    Finding Ways to Keep Brazilian Teachers’ Salary Floor from Going Up

    Until the Federal Supreme Court (STF) reaches a decision, Brazil will be waiting to ...

    Brazil’s Lula: It’s Our Fault

    Brazilian President Lula told an audience of big investors in the US that his ...

    Older people will suffer with the new budget amendment - Marcos Santos/USP Imagens

    The Temer Administration Wants to Put Brazil in a Straitjacket for 20 Years

    Brazilian President Michel Temer has been trying to take drastic steps to address the ...

    80% of the World’s Countries Eat Brazilian Meat. Add Tunisia to the List.

    Brazilian meatpacking plants are going to start exporting cattle beef to Tunisia at the ...

    Brazil’s Lula: Globalization of Justice Would End Terror

    Speaking at the meeting of the World Commission on the Social Dimension of Globalization, ...

    Brazil’s Coffee Growers Want More Federal Help

    Coffee prices improved 21.41% this year in relation to 2004, but it was still ...

    Number of Jobs Decline 0,6% in Brazil

    Brazil’s industrial employment level declined 0.6% in November, 2005, in comparison with October, when ...

    Lula Promises to Make Brazil an OPEC Member and World’s Greatest Energy Power

    Brazilian President Luiz Inácio Lula da Silva promised an "energy revolution" that will make ...