Brazil closed out 2017 with inflation of 2.95%, the lowest level since 1998, when inflation was just 1.65%, the Brazilian Census Bureau (IBGE) said Wednesday. Inflation, thus, ended the year below the government’s target range of 3.0% to 6.0%. It was the first time for inflation to dip below the lower end of the range under Brazil’s inflation targeting program, in force since 1999. Under the plan, the Central Bank must now address a letter to the Finance Minister explaining why inflation failed to meet the target range. Inflation in 2016 was 6.29%. Brazil’s inflation rate plunged in 2017 for a number of reasons. One was sluggish consumer demand due to an ongoing economic slowdown. Another was a record-breaking grain and oilseeds crop, which kept food prices low. Overall, food prices declined, in nominal terms, in 2017 by 1.87%. Inflation is likely to rise somewhat in 2018, according to economists. Consumer demand is rising as Brazil enters a period of economic recovery. The grain and oilseeds crop will likely fall back from historically high levels. Fuel prices are already rising in line with international trends. Economists are predicting 2018 inflation of about 4.0%.
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