Food inflation gains strength and drops by 15% in 12 months

While products and services such as gasoline and electricity began to decline, food prices regained strength in Brazil.

A sign of this is that the inflation of the food and beverage group approached again 15% in the accumulated of 12 months, according to the IPCA (National Index of Broad Consumer Prices).

Until July, the high reached 14.72%, according to data released this Tuesday (9) by the IBGE (Brazilian Institute of Geography and Statistics). The rate was 13.93% up to the previous month.

The most recent accumulated is the most intense since February 2021. At the time, the group registered inflation of 15% in 12 months.

The IPCA includes nine groups of products and services. Only clothing (16.67%) rose more than food and beverages until July.

The food shortage mainly affects the poorest strata, who have the least financial means to deal with the rise in prices.

Economist Luca Mercadante, from Rio Bravo Investimentos, believes that food inflation is associated with a set of factors.

Supply problems with adverse weather at the beginning of the year, rising production costs and the effects of the Ukrainian War are on the list, he said.

The conflict that started in the first quarter was responsible for boosting agricultural commodity prices on the international market.

Among the foods surveyed in the IPCA, the greatest changes in the 12-month period up to July came from papaya (99.39%), watermelon (81.6%), onion (75.15%), strawberry (73.86%) , potato (66.82%) and long-life milk (66.46%).

According to Mercadante, recent signs of a truce in commodities in the international market may generate some relief for food prices until the end of the year.

This deceleration, however, tends to occur at a slower pace than in other groups, ponders the economist. There are still uncertainties in the supply and demand scenario, he says.

“Foods should go down a path of deceleration, but at a slower rate than other groups.”

Sergio Vale, chief economist at the consultancy MB Associados, also sees food prices at a still high level in the coming months, even with a possible loss of breath.

Vale projects a deceleration of the group to close to 12% in the accumulated until the end of the year.

In the composition of the IPCA, only the transport segment weighs more than food and beverages. In the 12-month period, transport inflation decelerated from 20.12% in June to 12.99% in July.

This loss of breath was driven by the truce of fuels, especially gasoline. Product prices began to fall with recent cuts in ICMS (state tax) rates.