The President of the Central Bank, Roberto Campos Neto | Photo: Raphaël Ribeiro / BCB
The President of the Central Bank (BC), Roberto Campos Neto, said that the high inflation recorded in the country in 2021 is the result of a combination of three factors: the rise in prices, especially of raw materials; the scarcity of water, which makes it difficult to produce electrical energy; and what he called “imbalances between demand and supply of inputs.” Campos Neto presented the justifications in an open letter addressed to the Minister of the Economy, Paulo Guedes, published this Tuesday (11). The production of an inflation letter addressed to the Minister of the Economy is a legal obligation when inflation exceeds the objectives set at the start of the year. Inflation for 2021 was 10.06%. The target was 3.75%.
In the letter, Campos Neto points out that the increase in the prices of fuels and goods related to electricity are among the main “bad guys” of the high inflation. He mentions that the prices of gasoline, bottled gas and residential electricity have increased by 47.49%, 36.99% and 21.21%, respectively, in the past year.
Regarding commodities, Campos Neto cites that prices were affected by the Covid-19 pandemic in the first quarter of 2020, but after that they exceeded “pre-pandemic levels significantly “.
The text also specifies that the CB anticipates a rise in interest rates and a fall in inflation from the start of 2022. The bank puts the devaluation projection at 4.7% for the current year, dropping to 3 , 2% in 2023. and 2.6% in 2024.
Click here to read the full Campos Neto letter.