Inflation triggered gains gains in June – 06/30/18 – ECONOMY

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The major investments of Brazilians lost due to inflation in June, reflecting the historically low interest rate combined with soaring prices after truckers stopped working. Roadblocks at the end of May caused supply problems in the country and caused prices to rise. The June IPCA will be released by the Brazilian Institute of Geography and Statistics (IBGE) on July 6 and economists heard by the Bloomberg news agency are expected to close the month to a high of 1.26% , which equates to almost all the cumulative increase of the year, of 1.33%.

Nevertheless, the Central Bank decided to keep the Selic rate at 6.5% per annum because it believed that price shocks would be absorbed in the coming months. In practice, the slow recovery of the economy prevents the pbading on of higher costs to consumers. But the combination of low interest rates and high inflation has penalized investments in fixed income securities. The savings, the CBDs of the big banks, the single funds and even the government bonds that accompanied the interest rate went out at a loss.

In the accumulated year, some of these products still manage to guarantee a real gain by considering gross income without discounting the income tax. "This figure will scare the small investor, but inflation will not continue, next month, it will probably collapse," says Michael Viriato, professor of finance at Insper and author of the blog De Grão em Grão, organized by Folha de S. Paulo. The recommendation is not to significantly change investments based solely on the June result.

Viriato suggests, however, that even very conservative investors have certain applications that guarantee a gain over inflation, such as the IPCA Treasury + government securities. This type of investment pays a predetermined interest rate plus the change in inflation of the period. The worst performance of the month was the stock market, which fell 5.20%. Ibovespa, the country's main stock index, also suffers from the deterioration of the economy's outlook following the truckers' strike.

Until mid-May, most economists had an increase in GDP (Gross Domestic Product) of over 2%. Now the forecast is between 1% and 2%. Since then, the stock market has suffered heavy losses. The negative scenario has cooled this week, which ended with a 3% hike from Ibovespa to 72,762 points. Financial market badysts expect strong rises to persist in the coming months, at least until the race is clearer.

In July, however, the fluctuations may be less abrupt in view of the holiday season, which reduces the news of the political field. At that time, investors could focus on economic news, even if they are not all positive, explains Viriato. The same should happen with the dollar, which accumulates 4% in the month and 17% in the year. On Friday, the dollar closed at R $ 3.8890. This trigger has encouraged investments in foreign exchange funds, which are recommended for investors who have, in addition to willingness to take risks, dollar expenses, such as travel abroad.

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