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Goldman Sachs See Inflation Persisting Lower in Brazil

BRAZIL
  • Following the Brazilian inflation data, Goldman Sachs write that the slight moderation was driven by lower prints in vehicle fuel, partially offset by clothing, the seasonal increase in medicines, higher airfares, and higher than expected prints in food consumed at both home and away from home.
  • They flag that vehicle fuel has had a significant negative contribution to annual headline inflation following large fuel tax cuts and significant gasoline price cuts in 2H2022.
  • GS conclude that inflation may prove inertial (downward sticky) given intensifying backward looking price and wage setting mechanisms.

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