July 6, 2018 / 1:22 PM / 4 months ago

UPDATE 1-Strike pushes Brazil inflation to near middle of target

 (Recasts throughout with additional details from release,
context)
    By Bruno Federowski
    BRASILIA, July 6 (Reuters) - Product shortages due to a
truckers' strike lifted Brazil's inflation rate near the
midpoint of the official target range in June, underlining the
deep impact of the nationwide protests.
    Consumer prices tracked by the benchmark IPCA index rose
4.39 percent in the 12 months through June, government
statistics agency IBGE said on Friday, slightly below the median
4.42 percent forecast in a Reuters poll of economists.
            
    The reading, the highest since mid-April, brings the
inflation rate close to the 4.5 percent center of the central
bank's 2018 target range and above the 2019 target of 4.25
percent.
    However, that should not be enough to trigger interest rate
hikes anytime soon, according to economists. High unemployment
and a slow economic recovery is expected to keep a lid on
underlying price pressures, while recent inflation has been
driven by one-off shocks.
    Higher prices of milk and chicken provided the biggest
boosts to the IPCA index, which rose 1.26 percent from May, the
fastest monthly rate since mid-February 2016. The Reuters poll
indicated a 1.28 percent increase.            
    The jump in the price of perishables resulted from a protest
against higher diesel prices by loosely organized truckers, who
blocked major highways in the final weeks of May, forcing
farmers without market access to cull their flocks and dump
milk. Scarcer rains also drove up electricity rates.
    The central bank has said that increased uncertainty due to
the protests, as well as a currency selloff, is making it harder
to separate short-term shocks from wider changes in the economic
outlook.
    The central bank last month held the benchmark Selic rate at
an all-time low of 6.50 percent, as widely expected, but
refrained from signaling future rate moves. Economic indicators
for May and June are likely to play a key role in determining
policy, the bank has said.             
    
    Below is the result for each price category: 
                              June         May       
- Food and beverages          2.03         0.32     
- Housing                     2.48         0.83      
- Household articles          0.34        -0.06     
- Apparel                    -0.16         0.58     
- Transport                   1.58         0.40     
- Health and personal care    0.37         0.57     
- Personal expenses           0.33         0.11     
- Education                   0.02         0.06     
- Communication               0.00         0.16     
- IPCA                        1.26         0.40 

 (Reporting by Bruno Federowski
Editing by Susan Thomas)
  
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