Economists covering the Brazilian economy raised their 2011 inflation forecast for the first time in 10 weeks after prices rose faster than expected in June.
Consumer prices will rise 6.31 percent this year, according to the median forecast in a July 8 central bank survey of about 100 economists published today. The figure was up from 6.15 percent the previous week.
Economists also raised their prediction for 2012 inflation. Prices, as measured by the IPCA index, will rise 5.20 percent next year, the survey found, compared with a forecast of 5.10 percent the previous week. The June inflation number increased doubts that the central bank will hit its targets, said Pedro Tuesta, a Washington-based economist for Latin America at 4Cast Inc.
“The market has started to talk about how the central bank isn’t going to make it,” Tuesta said in a telephone interview. “More and more people are thinking that inflation inertia, especially on service prices, will push 2012 inflation up.”
Central bank President Alexandre Tombini told a Senate hearing last week that inflation will peak in August. Tombini reiterated that he expects to achieve his goal of 4.5 percent inflation by 2012, and said that steps already taken by the bank to cool the economy will take time to be fully felt.
Policy makers raised interest rates for a fourth consecutive meeting last month, boosting the benchmark lending rate a quarter-point to 12.25 percent. Economists expect the bank to raise the rate to 12.75 percent by the end of this year, from a week earlier forecast of 12.50 percent, the survey found.
Consumer prices rose 6.71 percent in June from a year ago, led by increases in food and fuel costs. Consumer prices rose 0.15 percent in June from May, while service prices rose 0.67 percent. Commodities prices rose 31.65 percent in June from a year ago, according to an index published by the central bank. The government targets inflation of 4.5 percent, plus or minus two percentage points.
Economists held their forecast for 2011 economic growth at 3.94 percent, and their 2012 growth forecast at 4.1 percent. The yield on the interest rate futures contract maturing in January 2013, the most traded in Sao Paulo today, was unchanged at 12.710 percent at 8:07 a.m. New York time.