Brazil inflation rising higher than expected behind World Cup
June 19, 2014 1:36 am
Compliant to the forecast of Brazil’s Finance Minister Guido Mantega, the ongoing football World Cup has led to increased inflation levels across the country, but not at the pace that was expected.
A surge in the combination of travel related products and services has pushed the IPCA-15, the South and Latin American country’s inflation benchmark, to 0.47% during the first two weeks of June. While that rate is lesser than that of the previous month’s 0.58% during the build up to the international football tournament, it represents a higher degree of change than the 0.42% median of a Bloomberg survey on market expectations.
Price changes in Brazil were apparent across a variety of tourism related industries. Airfares contributed the most to the rising rate with prices climbing by 22.2% while monthly hotel prices increased the most in fourteen years by 4.1%. The cost for the accompanying tours went up by 5.3%. Likewise, personal expenses and food & beverages rose by 1.09% and 0.21%, respectively, with the latter already representing a slowdown in change.
The Central Bank of Brazil’s ideal scenario is for inflation to only be at 4.5% with a leeway in any direction of two percentage points, but June’s price change is contributing to make those levels nearly reach the maximum level of where they want it to be. With its yearly inflation to June climbing from the previous month’s 6.31% to the current 6.41%, government targets are becoming more likely to be breached this month. More protests are expected to break out should levels go beyond the ceiling of 6.5%, making it an area of concern for the winner of Brazil’s upcoming presidential elections in October.
Analyst predictions on what will be this year’s growth in Brazil, the largest country and economy in Latin America, was reduced to 1.24% after expanding by 2.5% in 2013.
The material has been provided by InstaForex Company – www.instaforex.com
Compliant to the forecast of Brazil’s Finance Minister Guido Mantega, the ongoing football World Cup has led to increased inflation levels across the country, but not at the pace that was expected.
A surge in the combination of travel related products and services has pushed the IPCA-15, the South and Latin American country’s inflation benchmark, to 0.47% during the first two weeks of June. While that rate is lesser than that of the previous month’s 0.58% during the build up to the international football tournament, it represents a higher degree of change than the 0.42% median of a Bloomberg survey on market expectations.
Price changes in Brazil were apparent across a variety of tourism related industries. Airfares contributed the most to the rising rate with prices climbing by 22.2% while monthly hotel prices increased the most in fourteen years by 4.1%. The cost for the accompanying tours went up by 5.3%. Likewise, personal expenses and food & beverages rose by 1.09% and 0.21%, respectively, with the latter already representing a slowdown in change.
The Central Bank of Brazil’s ideal scenario is for inflation to only be at 4.5% with a leeway in any direction of two percentage points, but June’s price change is contributing to make those levels nearly reach the maximum level of where they want it to be. With its yearly inflation to June climbing from the previous month’s 6.31% to the current 6.41%, government targets are becoming more likely to be breached this month. More protests are expected to break out should levels go beyond the ceiling of 6.5%, making it an area of concern for the winner of Brazil’s upcoming presidential elections in October.
Analyst predictions on what will be this year’s growth in Brazil, the largest country and economy in Latin America, was reduced to 1.24% after expanding by 2.5% in 2013.
The material has been provided by InstaForex Company – www.instaforex.com
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