The Broad Consumer Price Index (IPCA), which measures official inflation in the country, stood at 0.16% in September. In 12 months, the accumulated index is 2.54%, below the minimum limit of the government target. The goal in 2017 is to keep inflation at 4.5% per year, but there is a tolerance of 1.5 point, that is, it can vary between 3% and 6%.
The sharp fall in inflation from a 12-year high of 10.71 per cent at the beginning of last year is good news for the government of President Michel Temer, who is facing a stream of corruption allegations at a time when Latin America’s largest economy is emerging from its worst recession in history.
Low inflation also allowed Brazil’s central bank to lower rates. When the country fails to meet the annual target, with inflation above or below the tolerated limit, the president of the Central Bank needs to send an open letter to the finance minister explaining why it has not been fulfilled, what actions will be taken and the expected time for these measures to take effect.