Minister of Finance defends review of inflation calculation in Brazil

Executive Secretary of Finance, Dario Durigan.
Diogo Zacarias/Ministry of Finance
The Minister of Finance, Dario Durigan, was in favor of discussing possible adjustments in the way inflation is calculated in Brazil, arguing that scholars point to a gap in the list of items used to measure price increases.
In a podcast produced by Warren Investimentos, Durigan stated that the current model still gives more importance to items that have lost relevance, while others, which have gained weight in recent years, have less representation.
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"Our model, for example, gives weight to things that today no longer have the weight they had previously, and things that today have weight, streaming subscription, cloud service, sometimes already weigh much more than something that was in the methodology decades ago", he said.
The interview was recorded on Friday (12) and released this Monday (15).
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The minister also said he welcomed the debate on improvements in the Focus bulletin, from Central Bank, so that research becomes more transparent. Focus is a report released by the BC that brings together market projections for inflation, interest and the economy.
In the interview, Durigan stated that he would not change the inflation target, currently at 3%, although he assesses that the continuous inflation target model (in which the target is valid all the time, and not just in a specific period) adopted by the government has not yet been fully understood by society and scholars.
When addressing the high level of interest in the country, Durigan pointed out the fluctuations in the dollar and the low level of savings as factors that negatively impact the country's interest rate policy.
"The issue of savings is an important element, volatility in the Brazilian exchange market is another mechanism that we hear a lot, even though this is not said much, there is a risk premium that Brazil has to pay to guarantee some stability", he said.
The minister also recognized that fiscal policy directly influences the economy's interest rates and defended containing the advance of mandatory expenses to make room for investments.
He once again stated that the government will insist on negotiations so that the National Congress does not approve bomb agendas, with a high fiscal impact, which could affect inflation, the tax burden and the level of interest.
If the measures are approved, according to the minister, the government will have to veto them and may sue the Federal Supreme Court (STF).
The economic team estimated last week that proposals being processed in Congress add up to an estimated extra cost of R$111 billion per year for public accounts, including measures such as debt renegotiation rural areas, the raising of the Simples Nacional ceiling and the increase in salary floors for professional categories.

Source: G1