Brazilian consumer inflation projections remain stable in September

Brazilian consumer inflation expectations for the next 12 months rose from 5.7% in August to 5.6% in September, a slight decrease of 0.1 point.
Economics
24 September 2018
Brazilian consumer inflation projections remain stable in September

Brazilian consumer inflation expectations for the next 12 months rose from 5.7% in August to 5.6% in September, a slight decrease of 0.1 point. The index dropped 1.1 percentage point over the same period last year.

“The consumer inflation projection is well anchored and closely follows the inflation measured by the Broad Consumer Price Index (IPCA). It seems that while price variations remain stable, the expectation of consumers for the future will continue at the same pace and will drift around 5%. This is great news, considering the great electoral uncertainty that we are experiencing at the moment”, said economist Pedro Costa Ferreira, from FGV’s Brazilian Institute of Economics (IBRE).

In the distribution by expected inflation ranges, the number of consumers who projected values within the tolerance limits (3%-6%) of the inflation target of 4.5% set by the National Monetary Council for this year increased from 56.3% in August to 57.6% in September. The ratio of consumers projecting values below the lower limit (3%) increased from 8,2% in August to 8.4% in September. The ratio of consumers who expect inflation figures between the lower limit (3%) and the middle of the target went from 28.8% to 30.2% in the same period, the largest number in the past six months. The ratio of consumers indicating values above 12% dropped 1.1 percentage point, below the average relative frequency of 7.0% in the previous six months.

Inflation forecasts by income range changed very little in September. There was a slight reduction of 0.1 percentage point among families with a monthly income of up to BRL 2,100.00, from 6.3% in August down to 6.2% in September. For consumers with a monthly family income between BRL 4,800.00 and BRL 9,600.00, inflation expectations also advanced 0.1 p.p., but to 5.5%, the highest level since October 2017 (5.9%).

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