Inflation rates affecting businesses in Brazil

January 25, 2013
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Inflation Rates Affecting Businesses

Businesses developing dealings in Brazil will often encounter challenges with meeting the financial regulations of this country, such as tax laws and tariffs for certain product trades. Banking regulations in Brazil may also pose certain difficulties for companies that are undergoing changes, such as mergers, real estate purchases or acquisitions. Business owners would be wise to consult a Brazilian lawyer from a quality Brazilian law firm regarding the financial laws of tariffs, taxes and real estate developments.

The international news-based blog Beyondbrics reported that Brazil's monetary policymakers held the interest rate for the country at a steady 7.25 percent due to the belief that this will keep inflation on a downward spiral. However, market economists have predicted that inflation will rise in 2013 despite the interest rate regulations. So far,inflation has increased from 5.53 percent to 5.65 percent.

Last year, the country's consumer inflation was also 1.34 percent higher than the government's targeted rate of 4.5 percent. Monetary stimulus has also had little impact on Brazil's economy, according to the source.

However, a January 21 article from Bloomberg shows that the measure of inflation is lower than expected, which means policymakers will not have to raise benchmark borrowing costs. Some prices, such as wholesale, construction and consumer, did rise in January.

"There was an unexpected deflation of agricultural products, which is even more surprising in January, when food costs generally surprise on the upside," Flavio Combat, an economist at Concordia Corretora, told the news source in a phone interview. "We also had a small drop in growth forecasts that weighed a bit on the market."

The consumer inflation rate can affect the transactions of any business. With the help of a Brazilian law firm, companies encountering financial and legal difficulties will be able to cross these challenging roads effectively.

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