By Ben Tavener, Senior Contributing Reporter

SÃO PAULO, BRAZIL – According to Brazil’s National Consumer Expectations Index, the INEC, concern surrounding inflation among Brazilians is at its highest level since 2001, Globo News reports. The overall index was stable at 110 points in July, the CNI (National Confederations of Industry) said on Monday, after a fall of 3.5 percent in June, but was 2.7 percent down year-on-year.

Inflation Worry Highest Since 2001, Rio de Janeiro, Brazil News
Consumers are said to be concerned by inflation, but more optimistic about personal debt and their spending power, photo by Leo Byrne.

However, the CNI says Brazilians are pessimistic about changes to prices in the second half of 2013: the indicator for inflation expectations fell 5.9 percent in July, down 11.1 percent year-on-year and the lowest since 2001. The lower the score, the greater the concern among the public.

Brazilians were similarly pessimistic about the country’s unemployment outlook, which fell two percent on June and 8.1 percent year-on-year.

The CNI says the “downward trend indicates consumer pessimism about the ability of the Brazilian economy to continue to generate new jobs in the next six months.”

However, the survey came to the conclusion that consumers were “optimistic” about personal debt, and therefore more likely to buy higher-value goods.

Brazil’s Central Bank says its market research suggested that inflation, as measured by the National Consumer Price Index (IPCA), would stand at 5.75 percent in 2013, far higher than the middle-line target of 4.5 percent, but below the upper limit of 6.5 percent. Earlier in July, President Dilma Rousseff promised inflation would be on target by the end of the year.

Market predictions for GDP (gross domestic product – the sum of all goods and services produced in the country) for 2013 was reduced to 2.28 percent, the Central Bank revealed this month. This was higher than the CNI’s prediction, which gave expectations that growth in 2013 would not reach more than two percent. The Central Bank projection for GDP in 2014 is currently 2.6 percent, which has remained stable in recent weeks.

Last year the government said growth in 2013 would reach over four percent – forecasts which have since been slashed. However, growth in 2013 is still expected to beat the paltry 0.9 percent growth seen last year.

Read more (in Portuguese).

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