Brazil's CPI Inflation Rises to 7.12%

The Brazilian CB very unxpectedly dropped interest rates earlier this month, at the apparent pressure of the government. The move was hghly criticized as politial as it rusn the risk f unleashing inflations.

The critics got more ammunition today as a measure of inflation jumped to 7.12%. The risk of inflation exceeding the target ceiling in 2011 of 6.5%, is "relevant" in the words of the Coordinator of Economic Analysis of the Getulio Vargas Foundation (FGV) Solomon Frames. He made the comment noting that retail inflation in 12 months, as measured by the family of IGPs is still above 7%. The CPI-10 is up 7.12% in 12 months to September.


Until and including August, the IPCA, calculated by IBGE and used as a reference to the inflation target, is up 7.23% in 12 months. "It is not impossible, mathematically for inflation to drop to 6.5%. But it is very difficult. I think it is an increasingly strong case that it is above target," he said.