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UPDATE 1-Brazil 2013 inflation forecast down on energy price cuts
September 17, 2012 / 12:41 PM / in 5 years

UPDATE 1-Brazil 2013 inflation forecast down on energy price cuts

* Analysts trim 2013 inflation forecast to 5.50 pct

* Rate outlook unchanged, another cut expected in Oct

* Economists cut 2012 growth view to 1.57 pct

SAO PAULO, Sept 17 (Reuters) - Economists trimmed their forecasts for Brazil’s consumer price index next year after the government announced measures for aggressive cuts in electricity rates, a central bank survey showed on Monday.

The median forecast in the poll of around 100 economists edged down to 5.50 percent from 5.54 percent a week before.

Brazil’s government announced on Tuesday measures to cut electricity costs drastically starting next year, the latest attempt by President Dilma Rousseff to revive the once-booming emerging economy.

Finance Minister Guido Mantega said cheaper electricity would slow inflation by between 0.5 and 1 percentage points in 2013, but analysts warned that a possible rise in gasoline prices could offset most of the relief.

The market forecast for inflation this year was raised for the tenth week in a row to 5.26 percent from 5.24 percent previously. The official inflation target for both 2012 and 2013 is 4.5 percent, plus or minus 2 percentage points.

Analysts kept unchanged their estimates for the benchmark interest rate at the end of 2012 and 2013, at 7.25 percent and 8.25 percent, respectively. The so-called Selic rate is currently at 7.50 percent, and analysts expect a 0.25 percentage point cut at the central bank’s Oct. 10 monetary policy meeting to put an end to the central bank’s aggressive rate-cutting cycle aimed at reviving the economy.

Gross domestic product in Brazil, the world’s sixth-largest economy, is expected to grow just 1.57 percent this year, down from a forecast of 1.62 percent a week before.

That would be the weakest annual performance since 2009 and a sharp slowdown from 7.5 percent growth two years ago.

In 2013, Brazil’s GDP is expected to grow by 4 percent, according to the survey.

Consumer prices are expected to rise 0.45 percent in September over August, the survey said, up from a forecast of 0.44 percent for the month made a week earlier.

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