World Economic outlook - Brazil Producer Price Index (PPI) February 2012 : Wholesale prices in Brazil retreated for a third-consecutive month in February as food prices continued to ease in Latin America's largest economy.
Brazil's official IPP producer price index retreated 0.38% in February compared with a decline of 0.43% in January, the Brazilian Geography and Statistics Institute, or IBGE, said Friday.
The index, launched in 2011, measures monthly variations in product prices at the factory gate, not including taxes or freight charges. The IPP rolling 12-month rate was 0.76% through February compared with a 1.75% advance through January, the IBGE said.
The continued deceleration in prices at the factory gate should help support the Brazilian Central Bank's contention that inflation is retreating toward the government's target range. Easing inflationary pressures will allow the central bank to continue cutting interest rates to boost activity in Brazil, which slowed in the second half of 2011 amid concerns about global economic growth.
The central bank embarked on a monetary easing cycle in August that has slashed the benchmark Selic base interest rate to 9.75%, down from a 2011 peak of 12.5%. The government has also implemented a series of tax cuts and credit measures aimed at stoking domestic demand. Brazil ended 2011 with gross domestic product growth of 2.7%, well off the stunning 7.5% growth registered in 2010.
Finance Minister Guido Mantega said earlier this week that growth in 2012 should be faster than last year, including GDP expansion at an annualized rate of about 5% in the second half.
Inflation has also cooled in recent months after the official IPCA consumer price index ended 2011 at 6.5%, the ceiling of the government's target range of 4.5% plus or minus two percentage points. Brazil revised downward its outlook for 2012 inflation to 4.4% in the central bank's most recent quarterly inflation report, released Thursday. Previously, the bank expected inflation to end 2012 at 4.7%.
The bank, however, did raise its 2013 inflation forecast to 5.2% from 4.7% previously.
February's producer price declines were led by food prices, which slid 1.75% from January, IBGE said. Manufacture of tobacco products also sank 2.9%, while production of chemical products fell 1.0%. Clothing and textiles, however, jumped 2.2% month-on-month in February, while the cost of printing rose nearly 2.0%, the IBGE said.
The IPP covers price data on raw materials and processing in 23 industrial segments that represent about 70% of factory activity, including food, textiles, pharmaceuticals, fuels, vehicles and shipbuilding. The index does not yet contain oil production and mining, which are expected to be included next year. Other services such as transportation, lodging, telecommunications and agriculture will also be included at a later date. The IPP figures are not seasonally adjusted, but will be revised.
The government has also implemented a series of tax cuts and credit measures aimed at stoking domestic demand. Free PPI Claims
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