Brazilian central bank sees signs of stabilization despite inflation

Brazilian Central Bank President Roberto Campos Neto described inflation in Brazil as “quite high,” although he sees signs of stabilization. Campos Neto was speaking Monday (15) during an online event organized by the Millenium Institute.

According to the head of the Monetary Authority, the effects of the government’s efforts to reduce electricity and fuel prices are already being felt. However, prices continue to rise in the services sector. “Services are very important for inflation dynamics,” he said.

In July, Brazil’s benchmark consumer index, IPCA, recorded deflation of 0.68%, the lowest rate in the historical series that began in 1980. So far this year, the indicator, measured by the Brazilian Institute of Geography and Statistics (IBGE), was 4.77% and 10.07% in 12 months.

The central bank president also affirmed that inflation in Brazil is a reflection of the international situation. “It was clear to us that this global inflation would infect Brazil. We had particular problems in Brazil, such as the water crisis and some strong inflationary effects on food,” he said.

One of the factors that led to the widespread price increase, he said, was the growing demand for various products that exceeded the production capacity at the time. “When we thought the shortage was supply-related, we found that was not the case. It was due to demand,” he said.

However, he pointed out that production chains have already adjusted to the new level of demand. “There was a big adjustment in certain production sectors, such as semiconductors,” he said, referring to components that caused great difficulties for several industry segments, such as automakers, due to their scarcity.

For next year, Campos Neto believes it is necessary to evaluate the impact of the measures that have reduced tax collection or increased public spending this year.

With information from Agencia Brasil.