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Market
readout presented stability in expectations for inflation.
IPCA is expected to reach 3.89% in 2006, 4.50% in 2007 and
4.34% in the coming 12 months according to last week’s
market readout (4.04%, 4.50% and 4.23% in the previous release,
respectively).
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IPC-S
released at -0.40% in June.
The main driver for for the strong fall in IPC-S (from the
-0.19% observed in May) was the higher deflation observed
in food (from -0.94% in May to -1.68%). Apparel also showed
lower growth rate in June (from 0.53% to 0.25%). On the other
hand, fuel alcohol fell 6.54% last month after dropping almost
13% in May. Thus, the Transportation group went up from -0.71%
in May to -0.49% in June.
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PSBR
released at -BRL 855 mn.
The main driver for the PSBR deficit in May was the smaller
primary surplus, BRL 6.3 bn (19.4 bn in April), following
the seasonality of tax collection. Interest payments stood
at BRL 7.2 bn, the lowest level observed since April 2003.
The primary result was mainly driven by Central Government,
with a BRL 3.2 bn surplus, which was lowered by the deficit
in Social Security (BRL 3.3 bn). States and municipalities
and state-owned companies also presented primary surpluses
(BRL 2.1 bn and BRL 1.0 bn, respectively).
The 12-month accumulated data in the primary surplus-to-GDP
ratio remained virtually steady at 4.51% in May. The primary
result also improved the 12-month accumulated nominal result,
decreasing the deficit from 3.69% of the GDP in April to 3.34%
in May.
The debt-to-GDP ratio presented a slight fall, from 51.0%
in April to 50.7% in May. The main driver for that was the
estimated GDP growth (-0.5 percentage point), which was partially
compensated by interested payments (+0.2 percentage point).
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