By Lise Alves, Senior Contributing Reporter
RIO DE JANEIRO, BRAZIL – Brazil’s Consumer Price Index (IPCA), which measures official inflation in the country, registered a 0.09 percent in March, according to the Brazilian Institute of Geography and Statistics (IBGE). This is the lowest inflation rate for the month of March since the implementation of the Real Plan in 1994.
According to IBGE Coordination of Consumer Price Indexes manager, Fernando Gonçalves the IPCA accumulates inflation of 0.70 percent for the year and of 2.68 percent in 12 months.
“Since July of last year we have been registering rates below 3% for the accumulated in the 12 months,” said Gonçalves during the presentation to divulge the data.
The main factors responsible for the decline in the rate from February to March were transport, with deflation of 0.25 percent and communication with a deflation of 0.33 percent.
With the latest positive data analysts hope that the country’s stock exchange and currency will improve. The Brazilian market reacted negatively to former President Luiz Inacio Lula da Silva’s arrest over the weekend, uneasy with the political scenario for the October Presidential elections.
While the Bovespa Index plunged and closed down by 1.78 percent to 83,307 points, the Brazilian real registered its lowest level against the US dollar in almost sixteen months, at R$3.42/US$.
In addition to the political tensions in Brazil, analysts say the market was influenced by a possible trade war between the two largest economies on the planet, the United States and China. On Monday, the Chinese government dismissed the possibility of negotiations with the United States, criticizing US government’s plans to tax Chinese products going into the US by up to US$150 billion.
By mid-morning on Tuesday, the Bovespa Index had registered a 0.34 percent gain while the exchange rate remained at R$3.42/US$