Brazilian Economists Raise 2010, 2011 CPI Forecasts

Brazilian economists raised their year-end consumer price forecasts for 2010 and 2011 as rising consumer demand powers the fastest economic growth in over two decades, according to a weekly survey.

Consumer prices will rise 5.29 percent this year and 4.99 percent in 2011, compared with a week-earlier forecasts of 5.27 percent and 4.98 percent respectively, according to the median forecast in an Oct. 29 central bank survey of about 100 economists published today.

Economists cut their 12-month inflation forecast to 5.16 percent compared with 5.17 percent a week earlier, the survey showed.

Analysts raised their 2010 growth forecast to 7.60 percent, from 7.55 percent a week earlier. The economy will expand 4.50 percent in 2011, the survey forecast.

Analysts expect the central bank to raise the benchmark interest rate to 11.25 percent in April as domestic demand stokes inflation. Policy makers paused at 10.75 percent at their last two meetings, after raising it 200 basis points this year from a record low 8.75 percent.

Brazil’s unemployment rate fell to a record low 6.2 percent in September, from 6.7 in August. The figure was the lowest since the government began publishing the data in March 2002.

According to a Sept. 30 quarterly inflation report, policy makers forecast inflation will slow to 4.6 percent next year should the benchmark rate remain unchanged at 10.75 percent.

The bank targets inflation of 4.5 percent plus or minus two percentage points.

The real has appreciated 36 percent since the start of 2009, the second-best performer of 16 major currencies tracked by Bloomberg, behind the Australian dollar.

The bank holds its last monetary policy meeting of 2010 on Dec. 7-8.