Economy
Brazil's mid-month consumer prices unexpectedly fall
Brazil's consumer prices unexpectedly declined in the month through mid-July, the first monthly deflation reading in four years.
Consumer prices as measured by the IPCA-15 index fell 0.09 percent in the June 15-July 13 period, the national statistics agency said. Economists expected the index to rise 0.02 percent, according to the median of 36 estimates in a survey of economists conducted by Bloomberg. Twelve-month inflation slowed to 4.74 percent from 5.06 percent in June.
Brazil's central bank will raise its benchmark interest rate 0.75 percentage point to 11 percent tomorrow, according to 36 of 38 economists surveyed by Bloomberg, as policy makers bet that more action is needed to prevent Latin America's biggest economy. Consumer prices, as measured by the benchmark IPCA index, remained unchanged in June from the previous month, the lowest in four years.
The yield on interest-rate future contracts maturing in January, the most traded on Sao Paulo's BM&F Exchange, fell five basis points, or 0.05 percentage point, to 11.00 percent at 8:12 a.m. New York time.
Policy makers have lifted the benchmark Selic rate twice this year, from a record low of 8.75 percent in March, to try and push annual inflation down towards its 4.5 percent target.
The $1.6 trillion economy is showing signs of cooling from an annual growth rate of 9 percent in the first quarter, its fastest pace since 1995, after job creation and tax collection in June trailed economists' forecasts.
Brazil created 212,952 government-registered jobs in June, down from 298,041 in May, according to the Labor Ministry. Industrial output and retail sales expanded in May less than analysts forecast.
Brazil's economic growth will cool in the third quarter after the government withdrew stimulus measures enacted during the global financial crisis including tax cuts, Finance Minister Guido Mantega said July 14.
Gross domestic product will rise 5.5 percent to 6 percent in the third quarter from a year earlier, he said.
(Published by Bloomberg – July 20, 2010)