Brazil Economists Forecast Faster 2012 and 2013 Inflation

Economists covering Brazil increased their 2012 and 2013 inflation forecasts after two price indexes published last week rose more than expected.

Consumer prices will increase 5.12 percent this year, up from the previous estimate of 5.08 percent, according to a weekly central bank survey of about 100 economists published today. The economists raised their forecast for 2013 inflation to 5.53 percent, from 5.5 percent the previous week.

Analysts expect central bank President Alexandre Tombini to hold the benchmark Selic rate at 9 percent this year, the survey found, even after the bank signaled last week that it may continue to cut borrowing costs. Policy makers will raise the Selic to 10 percent next year, the survey found.

In the minutes to its April policy meeting, published last week, the central bank said that future interest rate cuts will be “conducted with parsimony.” Tombini has cut borrowing costs by 3.5 percentage points to 9 percent since August, more than any other central banker in the Group of 20 Nations.

Economists raised their estimate for economic growth this year to 3.22 percent, from 3.21 percent. Brazil’s economy will grow 4.3 percent next year, according to the survey, from a previous estimate of 4.25 percent.

Consumer prices climbed 0.43 percent in the month through mid-April, from 0.25 percent a month earlier, taking the annual rate to 5.25 percent. The monthly increase was higher than all but two economist forecasts in a Bloomberg survey of 42 analysts. The IGP-M index, Brazil’s broadest measure of inflation, rose the most in 14 months in April. Brazil targets annual consumer-price rises of 4.5 percent, plus or minus two percentage points.

To contact the reporter on this story: Matthew Bristow in Brasilia at mbristow5@bloomberg.net.

To contact the editor responsible for this story: Joshua Goodman at jgoodman19@bloomberg.net.