Inflation expectations fall for the eighth consecutive week

The financial market reduced inflation expectations, as measured by the Consumer Price Index (IPCA). According to data from the Focus Bulletin, released this Monday (10), the projection is 4.95% for 2023, which represents a drop in comparison with the index presented a week ago. This is the eighth fall in a row of inflation expectations.

The IPCA is considered the official index that measures Brazilian inflation. For this year, the inflation target, defined by the National Monetary Council (CMN), is 3.25%, with a tolerance interval of 1.5 percentage points (pp), up or down. Therefore, the inflation expectation still remains above the target.

In relation to GDP, the projection has remained stable since the previous week, and the growth expectation for 2023 is 2.19%. Stability occurs after eight consecutive weeks of increases. The scenario takes place in view of the disclosure of the result of the Gross Domestic Product for the first quarter of 2023 above expectations, up 1.9%.

The projection for the dollar has remained stable since last week, mainly due to the improvement in the country risk assessment, released by S&P. This is the third consecutive week of exchange rate stability. The currency is quoted at BRL 5.00 for 2023.

The projection of the economy’s basic interest rate, the Selic, remains at 12% for 2023. For 2024, the projection is 9.50% and, 2025, 9%. The previous weeks saw the Selic fall.

The IGP-M – the country’s main rent adjustment index – was revised to -2.64%, and represents deflation, in a sequence of weekly declines since the beginning of April 2023. This is the thirteenth straight week of decline of the IGP-M. Likewise, the IPCA Administrados, which represents services and products with readjustments defined by contracts or regulated by the public sector, fell for the tenth consecutive week and is at the level of 8.95%.

According to the Central Bank, “the information comes from the Focus Report and summarizes the statistics calculated considering market expectations collected up to the Friday before its release. It is released every Monday. The report brings the graphic evolution and the weekly behavior of the projections for price indices, economic activity, exchange rate, Selic rate, among other indicators. The projections are from the market, not from the Central Bank.”

By Brasil 61