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Brazil's 2020 inflation forecast up to 2% for first time since May -survey

Credit: REUTERS/PILAR OLIVARES

Brazil's 2020 inflation outlook rose to 2%, a central bank survey showed on Monday, the sixth week in a row it has risen and a reflection of the near-term upward pressure on consumer prices from the recent spike in the cost of some food staples.

BRASILIA, Sept 21 (Reuters) - Brazil's 2020 inflation outlook rose to 2%, a central bank survey showed on Monday, the sixth week in a row it has risen and a reflection of the near-term upward pressure on consumer prices from the recent spike in the cost of some food staples.

It is the first time since May that the central bank's regular 'FOCUS' survey of around 100 economists has pegged inflation this year at 2%.

While that is notably higher than the historic low of 1.5% in June, it is still way off the bank's official target of 4%.

The central bank last week kept its benchmark Selic interest on hold at a record low 2.00%. In its accompanying statement, policymakers said a "temporary food price increase" would help drive a "short-term" pick-up in inflation.

Perhaps more significantly, the survey showed that economists' average 2022 inflation forecast slipped to 3.40% from 3.50%, which is the central bank's goal for that year.

The near-term economic outlook held broadly steady, with an average forecast for a 5.1% fall in gross domestic product this year, the least pessimistic since May and close to the government's forecast for a 4.7% contraction.

That would still represent the steepest annual downturn on record, but it is a notable improvement from the consensus for a fall closer to around 7% earlier this year in the depths of the anti-coronavirus social isolation and lockdown measures.

(Reporting by Jamie McGeever; Editing by Steve Orlofsky)

((jamie.mcgeever@thomsonreuters.com; +55 (0)11 97189 3169; Reuters Messaging: jamie.mcgeever.reuters.com@reuters.net))

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