Consumer Expectation retreats in Brazil

The median expectation of consumers in Brazil for inflation in the next 12 months retreated to the lowest since September 2007, according to FGV’s Brazilian Institute of Economics (IBRE).
Economics
25 January 2018
Consumer Expectation retreats in Brazil

The median expectation of consumers in Brazil for inflation in the next 12 months retreated 0.4 points compared to the previous month, dropping from 5.8% to 5.4%, the lowest since September 2007 (5.2%), according to FGV’s Brazilian Institute of Economics (IBRE). There was a decrease of 2.5 percentage points, when compared to the same period in the previous year.

Consumer expectation for inflation keeps falling, a result that reflects to some extent the inflation figures for 2017 according to the IPCA (2.95%) and the IGP-M (-0.52%). The first due to staying below the floor target of inflation, and the second due to being the indicator on which net prices for rental amounts are based, an important item in the household budget. For the next few months, the inflation expectation indicator is expected to show more stable behavior, reflecting the general price level of the economy,” said economist Pedro Costa Ferreira, from FGV’s IBRE.

In the distribution by inflation ranges, 48.2% of consumers expected inflation to be within the tolerance limits (3% - 6%) established by the Central Bank. The range most mentioned by consumers was that between the lower limit (3%) and the target (4.5%), in 28.8% of responses. 

The expectation has favorably evolved in all income ranges, especially for families with income up to R$ 2,100.00, for whom expected inflation retreated 0.8 points. Consumers with income above R$ 9,600.00 continue with the lowest expectations (4%).

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