British Columbia president says Brazil’s inflation rate is lower compared to emerging markets, but warns of volatile elements

The President of the Central Bank (BC), Roberto Campos Neto, on Wednesday (2), in a closed-door meeting with investors, highlighted the strong deceleration of Brazilian inflation compared to other emerging markets. However, consider that when the volatile items are removed, the country’s inflation rate remains one of the highest in the group in 12 months.

The information is contained in the presentation given at the meeting organized by Santander in Madrid, Spain, and released by BC.

The document shows that Brazilian inflation was the second highest in the group of countries at the beginning of this year, second only to Russia, affected by the economic consequences of the invasion of Ukraine. Now, in September, the official 12-month inflation index – the IPCA – (7.2%) was already the second lowest, after only China.

But when food and energy prices are removed from the calculation, Brazilian inflation is still among the three highest levels in the group, around 10%, appearing after Russia and Chile.

However, the presentation also shows that Brazil is not the only emerging country with inflation expectations above the target for 2022 (5.61%) and 2023 (4.94%). Latin American countries have basically the same picture, such as Colombia, Chile and Mexico.

On the financial framework, Campos Neto noted that spending on energy cost easing, given the fuel, in Brazil was lower than in European countries, severely affected by the reduction in natural gas supplies by Russia.

According to the graph in the document released by BC, the cost of Brazilian actions was about 2% of GDP, while in the United Kingdom it exceeded 6%. In Italy, Spain, France and the Netherlands, spending was close to 3% of GDP.

Campos Neto also commented again on the acceleration of monetary tightening in developing countries and on the possibility of a slowdown in economic activity in the world. In China, there were positive surprises in the third quarter of 2022, but there are signs of an economic slowdown. The real estate sector is very important to the GDP and the wealth of families.”

The British Columbia president reiterated that Brazil is an “exception” in terms of prospects for economic activity, with increased growth expectations, while the world has a more negative outlook, according to the presentation.

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