Inflation in Brazil expected to slow down in October

According to Brazil’s Central Bank Chief Alexandre Tombini, Brazil’s inflation problems will decrease in October. Two days after official data disproved his previous forecast that rising prices would start slowing last month. Previously in a statement Tombini expected the inflation to slow down in September.

Annualized inflation was 7.31 percent in September, a new six-year high and well above the central bank’s upper limit of 6.5 percent, the government’s IPCA index showed on Friday.

Prices rose 0.53 percent in September from August due to a quick rise in fuel prices. Economists are concerned that the said expectations may be premature.

Tombini told the newspaper “In no way (will prices continue to accelerate), our horizon is December 2012 but in October 12-month inflation will begin to fall by 0.30 percentage points. Of those countries that have inflation targets, various economies have inflation above the band or target,”

After the Brazilian economy was raised by 7.5 percent in 2010, the central bank raised its standard Selic interest rate consistently from the start of 2011 to 12.5 percent.

Tombini further added “Since the start of the year, our flight plan … was to moderate the growth of the Brazilian economy, there were signs, clearer every day that this slowdown was happening. We also said that monetary policy would have a delayed effect and that in the second half of the year these policies would be more strongly felt.”

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