The result missed neither the central bank’s annual target of 3.5% nor the top 5% of its tolerance band, marking the second consecutive year of default. By law, the governor of the central bank, Roberto Campos Neto, will have to publish a letter justifying the reasons.
The index rose 0.62% in December, according to IBGE, above the 0.45% forecast in a Reuters poll, driven mainly by higher prices for health and personal care items.
What were the measures that reduced inflation?
The largest Latin American economy came to register year-on-year inflation of 12.13% in April, the highest for a twelve-month period in the last twelve years, and that index gradually fell to 6.47% in October, 5.90% in November and 5.79% in December.
This slowdown occurred after the government of the far-right Jair Bolsonaro eliminated taxes on fuels, the main responsible for the jump in inflation at the beginning of the year.
The sharp drop in gasoline and diesel prices allowed Brazil to record three consecutive months of deflation for the first time in its history: -0.68% in July, -0.36% in August and -0.29% in september.
The new president of Brazil, Luiz Inácio Lula da Silva, went so far as to announce the suspension of this fuel subsidy this month, when he took office, but finally chose to maintain it to avoid an increase in inflation in his first months of government.
Despite the fact that it was much lower than the 10.06% inflation measured in 2021, the 2022 rate was above that of 2020 (4.52%) and that of 2019 (4.31%) and was the second highest since 2016 (6.29%). The 2022 index, however, exceeded for the fourth consecutive year the ceiling of the goal that the Central Bank had set.
The Issuer had set an inflation target of 3.5% for 2022, with a tolerance margin of 1.5 percentage points, which allowed the index to vary between a minimum of 2.0% and a maximum of 5.0 %.
What will happen in 2023
Market economists forecast that inflation will remain stable in 2023, by which time they expect a rate of 5.31%, and that it will drop to 3.7% in 2024 and 3.3% in 2025.
Source: Ambito
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