Brazil likely to post inflation at 7.0-7.2% in Q2

Brazil's year on year inflation rate was 8.5% in June. The inflation acceleration has continued throughout this year and average 2015 inflationprojections have been revised. The in-sample forecasts from structural inflation models indicates Brazil is likely to post inflation at 7.0-7.2% in Q2, which is much lower than the observed inflation of 8.5% yoy (based on the projection for June), estimates Societe Generale. 

"The additional inflation should be seen as the effect of price adjustments and the upside shock to food prices. However, while the escalating upside risks imply that the medium-term inflation outlook remains considerably uncertain, the model estimates appear to confirm a continued surge in trend inflation fundamentally", according to Societe Generale.