Raymond Colitt and Matthew Malinowski – Bloomberg, 8/3/2012
Brazil’s inflation was quickened by a temporary shock from agriculture price increases and will slow later this year, said Carlos Hamilton, the central bank’s director for economic policy.
Consumer prices rose faster than analysts expected in the month through mid-July, as adverse weather conditions in Brazil and abroad pushed up food prices 0.88 percent from the previous month. Brazil’s inflation will converge to the central bank’s target during the second half of the year as the climatic effects pass, Hamilton said to reporters in Salvador.
“The shock to supply originated in climatic changes,” Hamilton told reporters in Salvador while commenting on the central’s bank’s quarterly regional report, released today. “We have to wait to see its duration and intensity. Supply shocks are understood to be temporary.”
The bank, which has cut the benchmark rate by 450 basis points in the past year to a record 8 percent, targets inflation of 4.5 percent plus or minus two percentage points. Prices in the month through mid-July rose 5.24 percent from the year before.