August 10, 2015

Consumer prices in July increased 0.62% over the previous month. The print was below the 0.79% increase recorded in June but overshot market expectations of a 0.60% rise. The monthly result was driven largely by higher prices for electricity.



Headline inflation rose from 8.9% in June to 9.6% in July, which marked the highest rate since November 2003. As a result, inflation remains far above the Central Bank’s tolerance margin of plus/minus 2.0 percentage points around 4.5%. Inflationary pressures have risen dramatically since the beginning of the year despite consistent hikes in the Central Bank’s SELIC interest rate.

LatinFocus Consensus Forecast participants see inflation closing 2015 at 7.8%, which is up 0.3 percentage points from last month’s forecast. For 2016, the panel expects inflation of 5.6%.