Guedes denies lack of control of inflation and claims that rate between 7% to 8% is ‘in the game’ | Economy

Economy Minister Paulo Guedes denied this Monday (23) that inflation is out of control in Brazil. This is because, according to Guedes, the whole world is facing a similar price increase.

The minister also said that he considers that inflation between 7% and 8% is “in the game”. The accumulated in the last 12 months by the Extended National Consumer Price Index (IPCA) is 8.99%.

“Inflation goes up a little, everybody [fala em] ‘out of control’. It’s not out of control, inflation is rising all over the world,” he said, during a virtual event promoted by the Brazilian Society of Retail and Consumer Affairs (SBVC).

“American inflation will be 7% this year, ours will be 7%, 8%, we are in the game”, completed the minister.

Current Brazilian inflation is strongly influenced by the water crisis and fuel prices. In the year, the IPCA – the country’s official inflation – accumulates an increase of 4.76%.

Sardenberg: Brazil moves towards a 2022 of high inflation and high unemployment

Sardenberg: Brazil moves towards a 2022 of high inflation and high unemployment

Since March, the index accumulated in 12 months has been increasingly above the target ceiling established by the National Monetary Council (CMN) for this year’s inflation, which is 5.25%.

The center of the inflation target, which in 2021 is 3.75%, was far from the real numbers of the economy a long time ago.

The financial market, according to the latest Focus Bulletin, forecasts that inflation will end the year at 7.11%. It was the twentieth consecutive high in this projection.

Financial market raises inflation estimate to 7.11% in 2021 and sees lower GDP growth

Financial market raises inflation estimate to 7.11% in 2021 and sees lower GDP growth

Guedes also stated, at this Monday’s event, that the Central Bank – now formally independent from the government – ​​will be able to face the problem of inflation.

The law that gave autonomy to BC was sanctioned in February, but is challenged by the Supreme Court (STF) for alleged unconstitutionality. The STF must judge the theme from the next Wednesday (25).

Last Friday, Guedes acknowledged that the government can use additional instruments to help control inflation:

  • lower Mercosur tariffs – the measure requires unanimous approval by the countries of the trade bloc, but Argentina has already declared itself against the change.
  • reduce the Industrialized Product Tax (IPI), which would be a third stage of the government’s tax reform and, therefore, would depend on congressional approval.