Low food prices and high interest rates behind Brazil's waning inflation

Published 2024년 1월 2일

Tridge summary

In 2023, Brazil's inflation rate was 4.72%, with low food prices and high interest rates being identified as key factors. Economist Gilberto Braga attributed the success to the government and Central Bank's macroeconomic policy, but warned of potential external pressures from conflicts and El Niño. Researcher André Braz noted that the prices of agricultural and mineral commodities helped keep inflation lower than expected, and he estimated that inflation in 2024 would close around 4%, while cautioning about potential challenges from public spending and exchange rate devaluation.

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Original content

After Brazil's statistics bureau IBGE (Brazilian Institute of Geography and Statistics) released the inflation for 2023 in the South American country (4.72%), Agencia Brasil delved into the possible reasons behind this achievement and determined that low food prices and high interest rates played a significant role. Economist Gilberto Braga found that the figures show the success of the macroeconomic policy of the government and the Central Bank’s Monetary Policy Committee (Copom), which sets the country’s benchmark interest rate known as Selic, an index that remained high throughout the year but went down from 13.75% to 11.75% after four consecutive cuts in the second semester. Braga pointed out there are price groups still putting pressure on the rates, “especially rents, which have been rising above the average inflation.” However, he went on to note that “food prices in general have been on the wane, which has offset the upward pressure in a positive way.” “In 2024, this price ...

Source: MercoPress