Inflation in Brazil

Inflation in Brazil

Introduction

Brazil ended 2011 with an inflation of 6.5%, the highest recorded since 2004 when he finished at 7.6% and stood at the top of the goal set by the Central Bank, according to data released by the Institute Brazilian Geography and Statistics (IBGE).

The inflation target set for 2011 by the Central Bank in the Consumer Price Index (IPCA), was 4.5 percent, with a fluctuation margin of two percentage points to more or less. In 2010, with the same goal, inflation reached 5.9 percent (Ferreira, 2003, pp. 18).

The item that most impacted the rate increase was "Food and beverages", which represents almost a quarter of the household budget and has a high weight in the calculation of inflation. The item was up 7.18%, although the increase was lower than that recorded in 2010, when it rose 10.39%.

The largest increase year corresponded to the sector "Transport", which went from 2.41% in 2010 to 6.05% in 2011. Other items that influenced the rise in consumer prices in 2011 were: Clothing (8.27%), personal expenses (8.61%), Education (8.06%) and Health (6.32%).

Discussion

Inflation is a situation when the price increase is a gradual and slow, with an average of a few percentage points is not considered that this inflation is a serious threat to the economic and social progress. It may even stimulate economic activity: the feeling that the income staff is growing above the productivity can stimulate consumption, investment in home buying may increase, to anticipate the future price appreciation, the investment the business of business in factories and machinery can grow, as prices rise above costs, and individuals, companies and governments who borrow loans find that they paid money to have a lower purchasing power, so that will have a greater incentive to borrow money (BAER, 2005, pp. 13).

History of Inflation in ...