Brazil Economists See Faster Inflation and Slower Growth in 2014

Brazil economists raised their 2014 inflation forecast for the fifth straight week and cut their growth estimates as a food price shock curbs purchasing power in the world’s second-largest emerging market.

Brazil’s inflation this year will accelerate to 6.35 percent, compared with the previous week’s forecast of 6.30 percent, according to the April 4 central bank survey of about 100 analysts published today. Analysts also cut their 2014 growth estimates to 1.63 percent from 1.69 percent a week ago.

President Dilma Rousseff’s administration is struggling to spur growth amid above-target inflation. Brazil’s central bank last week lifted the key rate for the ninth straight time after a drought drove up food prices. Policy makers in an accompanying statement signaled they will observe economic progress before deciding on the future path of monetary policy.

The central bank on April 2 raised the Selic by 25 basis points to 11 percent. Policy makers have lifted borrowing costs the most in the world after Turkey in the past year in efforts to combat inflation that has remained above the 4.5 percent target for more than three years.

The rate boost came after the bank said consumer prices will rise 6.2 percent this year with the Selic at 11 percent, according to the quarterly inflation report published March 27. The inflation forecast compares with a 5.6 percent estimate in December’s report.

Faster Inflation

Annual inflation in March accelerated to 6.08 percent from 5.68 percent the month prior, according to the median estimate from 27 economists surveyed by Bloomberg. The national statistics agency will publish the official March inflation figure on April 9.

Brazil’s industrial output expanded in February for the second straight month. Brazil posted a trade deficit in two of the first three months of the year, while the unemployment rate surged to 5.1 percent in February, still a record low for the month, from 4.3 percent at the end of last year.

Growth in Latin America’s largest economy will slow to 2 percent this year from 2.3 percent in 2013, according to central bank estimates. Brazil’s growth has trailed the Latin America average since 2010, according to data compiled by Bloomberg.

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

To contact the editors responsible for this story: Andre Soliani at asoliani@bloomberg.net Harry Maurer

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.