On 27 September, Bloomberg reported: “The pace of inflation in the world’s second largest emerging market quickened for a third straight month through mid-September, to 5.31 percent, even as economic growth remained sluggish”, where food prices and personal expenditures caused the pace of inflation. Even thought that among the highest rates in the world, Brazil’s inflation rate roaming around 5% while central bank said that it’ll miss its inflation target at 4.5%.
“If you fight against a spike in inflation there is a cost in terms of activity,” Hamilton told reporters in Brasilia. “We would have three months to turn it around. Theoretically, this would imply a cost that is too high.”
GDP Growth Forecast
Recently, economists cut their 2012 growth expectations to 1.57% as Brazil’s economy has reacted slowly to government stimulus. Bloomberg reported.
“There is a definite shift in language. They are less concerned about growth and more concerned about inflation.”
Said Neil Shearing, chief emerging markets economist at Capital Economics Ltd.
However, the third quarter indicating that Brazilian economy growth is accelerating, the consumer confidence rising, while retail sales rose along with vehicle sales which have reached a record high in August.