Sao Paulo: Brazil economists raised their estimate for 2015 inflation and cut their growth forecast for the 14th straight week, as the government contends with a combination of above-target inflation and stagnating activity.

Analysts raised their 2015 inflation estimate to 8.20 per cent from 8.13 the prior week, according to the April 2 central bank survey of about 100 analysts published today. The last time inflation ended the year above the government-set target was 2003. The economists also lowered their forecast for economic growth to a decline of 1.01 per cent from negative 1 per cent previously. Analyst kept their forecast for the key rate at year-end at 13.25 per cent.

In an interview last week, President Dilma Rousseff committed herself to tighter fiscal discipline even as her approval rating is at the lowest for any president in 15 years. The fiscal adjustment will slow the economy in the short term and lay the foundation for recovery as confidence arises, according to Finance Minister Joaquim Levy.

Brazil’s inflation in the 12 months through mid-February accelerated to a near-decade high of 7.9 per cent from 7.36 per cent a month earlier. Food, fuel and electricity price increases accounted for more than three-quarters of the monthly reading.

Inflation Target

The central bank targets annual inflation of 4.5 per cent, plus or minus two percentage points. Bank directors have raised the benchmark interest rate four straight times to a six-year high of 12.75 per cent. Monetary policy is and will remain vigilant to bring consumer prices to the Centre of the target by the end of 2016, said economic policy director Luiz Awazu Pereira.

Economists in the survey see inflation easing to 5.60 per cent next year, with gross domestic product growth of 1.1 per cent, up from the previous week’s estimate of 1.05 per cent.

Brazil’s economy unexpectedly grew in the fourth quarter last year as gross domestic product rose 0.3 per cent from the three previous months. Analysts who had forecast stagnation for full-year 2014 were surprised by growth of 0.1 per cent, down from a revised 2.7 per cent in 2013. The statistics agency used a new methodology to arrive at the GDP numbers.