MercoPress. South Atlantic News Agency

Lula da Silva: inflation is “under control” and on target

“We're in a situation where Brazil figures as the main food reserve for the world” said Pte lula

Brazilian president Lula da Silva said on Monday that inflation in the country was “under control”, in spite of soaring world food prices and promised measures to further promote the production of grains, meats and milk.

"Brazil is ready to become the world's main producer of food", added Lula da Silva during his weekly radio program, "Breakfast with the President". "When the entire world currently is undergoing an inflationary process because of food prices, Brazil is the only big economy where inflation has not soared". "Inflation remains under control, in the range of the government's target", said Lula da Silva in direct reference to this year's 4.5% Central Bank goal, plus/minus two points. "We want to increase the production of food, increase the production of meat, milk, beans, rice because the more we produce the greater food security we'll have and we will also have the fairest prices". Lula da Silva emphasized that Brazil will produce all the food the world needs. "We're in a situation where Brazil figures as the main food reserve for the world", he added. Meanwhile in London Brazilian central bank President Henrique Meirelles said that the bank is ready to act against inflation as tightening monetary conditions keep price expectations in check. "The Central Bank has shown its commitment to the inflation target and is prepared to act to safeguard price stability, which is a pre-condition for sustainable growth" Meirelles said during a speech at the Brazilian Chamber of Commerce in London. The latest report shows that consumer prices in Brazil climbed 5.58% in the 12 months to May, the fastest pace since January 2006 and well above the 4.5% goal for the fifth straight month. "Monetary conditions in fact have tightened since the beginning of the year, and the results will be clearer in due course, considering the usual lags of monetary transmission to prices'' indicated Meirelles. "Thus, inflation expectations converge to the central bank target in 2009 and 2010, and are indeed below the central target for 2011 and 2012'' he pointed out. Brazilian annual inflation increased 0.79% in May, the biggest monthly jump in prices since April 2005. Brazil has become more resilient to external shocks, and its floating exchange-rate regime is best suited to act as a buffer against global forces, Meirelles said. Still, he said the global slowdown may affect the economy. But the Central Bank president insisted that Brazil's economic expansion is "solid" and that the economy on a "sustainable growth path" contrary to the "stop and go" cycles of the past.