The Central Bank admitted that the probability of inflation being above the target ceiling this year is close to 100%, according to the quarterly report released this Thursday (30).
In the previous document, in March, the risk was 88% in the scenario considered most likely by the monetary authority, based on the downward trajectory for the price of a barrel of oil. In the second scenario considered, in turn, the chance was 97%.
For 2023, the estimate has also increased, from around 12% to around 29%.
As reported by the IBGE (Brazilian Institute of Geography and Statistics), on June 9, the IPCA (Broad Consumer Price Index) reached 11.73% in the 12-month period up to May.
With the entry of data for June, the IPCA-15 (National Index of Extended Consumer Prices 15) started to accumulate a high of 12.04% in 12 months, rising 0.69%.
As disclosed in the preliminary presentation of the report, last Thursday (23), in the short-term projections, the BC considers highs of 0.81% in June, 0.84% ​​in July and 0.33% in August.
“If it materializes, inflation of 1.99% in the quarter will imply a slight decline in inflation accumulated in twelve months (11.73% in May and 11.31% in August),” said the monetary authority in the report.
The BC also projects an inflation peak of 12% in the second quarter and a drop to 8.8% at the end of this year. For the calculation, the set of information available up to the last Copom (Monetary Policy Committee) meeting, on June 14 and 15, was used.
Among the main factors for the upward revision of the 2022 figures, the monetary authority lists inflationary surprises, revision of short-term forecasts, rising oil prices, propagation via inflationary inertia of current pressures, growth in inflation expectations from the Focus survey, stronger-than-expected economic activity indicators and higher neutral real interest rate utilization than in the previous report.
“Among the administered prices, there are, such as inflationary items for 2022, fuel, pharmaceuticals, health insurance, license plates and water and sewage fees,” he said.
In the opposite direction, according to the BC, “electricity works due to the behavior of tariff flags and the incorporation of an estimate of the effects of Bill No. .
In the reference scenario, which uses a trajectory for the price of oil following approximately the future curve for the next six months, the autarchy did not incorporate the impact of the measures that were being processed in Congress -and have already been approved- aimed at reducing taxes on fuels, electricity and telecommunications.
“The projections presented here also depend on considerations about the evolution of the necessary reforms and adjustments in the economy. Their effects on the projections are captured through asset prices, the degree of uncertainty, the expectations determined by the Focus survey and their effect on structural interest rate of the economy”, he said.
“In addition to these channels, fiscal policy influences conditional inflation projections through impulses on aggregate demand,” he continued.
The IPCA estimated for the end of 2022 is well above the target set by the CMN (National Monetary Council) of 3.5% — with 1.5 percentage points of tolerance up and down.
When the estimates are confirmed, the president of the BC, Roberto Campos Neto, should write a letter to the Minister of Economy explaining the reasons for not meeting the objective for the second consecutive year.
​Inflation closed 2021 at 10.06%, while the center of the target was 3.75%. It was the biggest increase since 2015. As a justification, the head of the autarchy wrote that the double-digit IPCA was to blame for the global phenomenon.
In BC projections, inflation drops to 4% in 2023 and 2.7% in 2024, against targets of 3.25% and 3%, respectively.
The quarterly inflation report, released a week late due to the strike by BC civil servants, also brought a review of GDP (Gross Domestic Product) growth for 2022, which jumped from 1% to 1.7%.
The data had already been anticipated last week by the director of Economic Policy, Diogo Guillen, in the preliminary presentation.
According to Guillen, household consumption was the main factor in the upward revision of GDP, followed to a lesser extent by the impact of exports.
“I think it has more to do with what we saw in the first quarter and with preliminary data from the second quarter than with a prospective change in growth,” he said.
The director pointed out that the BC expects a slowdown in economic activity in the coming quarters, when the economy will feel the effect of the interest rate shock. At the last meeting, the Copom raised the basic interest rate (Selic) to 13.25% per year.
“Much of the monetary tightening will still be present in both inflation and growth,” he said.
The report also adds that “changes in the calendar of government transfers to families, such as the anticipation of the 13th salary of INSS retirees and pensioners and the concentration of the salary bonus in the first quarter” will contribute to the cooling of consumption in the second half of the year. negative on family income.
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