MercoPress. South Atlantic News Agency

Brazilian inflation steady.

Inflation in Brazil last August experienced a slight increase but in the framework of market expectations. According to the latest release from the Brazilian Geographic and Statistics Institute, consumer prices last month increased 0,34% following July's 0,2%.

In the first eight months of 2003, consumer prices reached 7,22%, compared to the 4,85% of the same period a year ago. In the last twelve months inflation totals 15,07%, well above the official 8,5% target for the whole year.

Actually last month electricity with a 2,03% increase was the greatest contributor to the inflation index with food dropping 0,27%. But gasoline rose 0,37% for the first time in five months.

However local analysts are encouraged by the latest inflation figures since they are essential for the monthly Central Bank assessment of interest rates.

Analysts expect that next week when the Central Bank Monetary Policy Committee meets, it will decide for the fourth month running to cut the basic interest rate.

A very strict credit policy with "exorbitant" rates, (to control inflation and the exchange rate) has been blamed for the current recession of the Brazilian economy.