Consumer prices fell 0.73% in the month to mid-August. Inflation slowed to 9.6% in 12 months, still well above the central bank’s target of 3.5% plus or minus 1.5 percentage points.
“We think we can’t let our guard down,” Campos Neto said. “In this latest inflation figure, foods are still much higher than we expected, we have some components of inflation that we expected to slow more quickly,” he acknowledged.
The Central Bank of Brazil has raised rates to 13.75% from the historical low of 2% in March 2021, but has given signs that it will stop its hardening at their September meeting.
Campos Neto, who recently predicted that inflation would be 6.5% this year, said it is important to note that the central bank remains “vigilant“.
He acknowledged that much of the slowdown in inflation for this year comes from government measures after the Congress will approve tax cuts on key consumer products, such as Energy and the gas.
Some of the measures will expire this year, but the president Jair Bolsonarowho is seeking re-election in October, has already promised his renewal in 2023. Campos Neto said that it is necessary to see what measures would continue next year and what would be the tax impact in Brazil.
He added that market expectations for inflation in 2023 and 2024 had started to settle and would fall “at some point”.
Source: Ambito
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