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Weekly Report - 3 July 2008 (ISSN 1741-7422)

BRAZIL: Central bank raises inflation forecast

Brazil's central bank published a report last week increasing its inflation forecast for 2008 to 6%, from an earlier estimate of 4.6%. The central bank's report claimed that inflationary pressures - initially coming from food prices, oil and other commodities - have now disseminated and reached several other products. The bank admitted that part of the problem originated externally. But its report also blamed internal demand, from consumers and growing investments, as well as government spending, for exacerbating inflationary pressures in Brazil. The Lula administration, meanwhile, decided to boost handouts given to the poor.

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