Brazil’s central bank is set to continue raising interest rates this week as inflationary pressure persists. Many economists expect consumer price inflation to be nudging the top end of the government’s target range of 2.5-6.5 per cent by the end of the year, well in excess of the core target of 4.5 per cent.

Inflation topped 6 per cent in the year to June; it is widespread and shows little sign of slowing. True, the “diffusion index” – the percentage of all items measured that are rising in price – has fallen to 67 per cent from a high of 71 per cent in May. But inflation has spread well beyond food and imported goods and is starting to have an impact on wage bargaining, as demonstrated by last week’s strike by workers at Petrobras, the government-controlled oil company. Oil workers say they will continue their industrial action and other workers can be expected to follow their lead.