Brazil: inflation

 

 

 

When measured against the consumer prices index, inflation reflects the annual percentage change in the cost to the average consumer of acquiring a basket of goods and services that may be fixed or changed at specific intervals, such as yearly.

The graph shows annual changes in the consumer prices index, which measures inflation at the consumer level. The index is important, as it is used by markets to anticipate the movement of monetary policy and to adjust prices and tariffs in the economy.

In 1996, Brazil finally got its inflation under control, after a decade in which it hadn't fallen below 500 per cent a year, peaking at just under 5000 per cent a year in 1993 (it did not sustain this rate for the whole year, which is why it is not visible in the zoomed-out version of the above chart).

Throughout this period, the country also experienced severe stagnation. Stability was regained through a three-fold plan, involving a mandatory balanced budget; a national index of prices, wages, taxes, and so on; and replacing the cruzeiro real, itself only introduced in 1993, with a new currency, the Brazilian real, pegged to the dollar.