Focus Bulletin

Projections made by financial market analysts and gathered in the Focus Bulletin show that Brazil will meet the inflation target

In the last newsletter Focus made in 2016 by the Central Bank, financial market analysts have improved the outlook for inflation in the year ended. The Broad Consumer Price Index (IPCA) is expected to remain at 6.38% - a week earlier, the forecast was at 6.40%.

Although the year is over, the official IPCA result for 2016 will be released only on January 11, next week. Before that number becomes public, however, the BC must release another edition of Focus.

With this latest improvement in the estimate for inflation in 2016, the BC survey reaches the eighth revision followed for the indicator. To reach this number, the institution interviews about 100 analysts and economists.

If this week's result is confirmed, the IPCA will be below the inflation target ceiling, that is, less than 6.5% - value considered the maximum tolerance limit.

The survey shows that, in early 2016, the market was pessimistic with the cost of living in Brazil, and in February it even projected inflation well above the tolerance limits, around 7.6%. Since then, numbers have entered a gradual process of reversal.

Falling food prices

Important products in the table of the Brazilian, who at the beginning of last year presented skyrocketing prices, began to register fall. The carioca bean, only in November (last data disclosed), fell 17.52%; The long life milk, also in November, fell by 7.03%.

This movement of falling food prices at the end of the year has been a favorable influence on the cost of living. This trend also led to improved expectations for the IPCA in December.

Between the latest release of the Focus and this, the projections for inflation in the last month of 2016 went from 0.41% to 0.39%. A month ago, that number was higher, it was at 0.55%.

Source: Portal Brazil, with the information Central Bank and IBGE