Brazil remains at the top of the ranking of countries with the highest inflation rates among the main world economies, even after the country registered historic deflation in July.
The official indicator of Brazilian inflation, the IPCA (Broad Consumer Price Index) dropped 0.68% in July, the lowest rate in the series of surveys started in 1980. Despite the monthly drop, Brazil still has accumulated inflation of 12 months of 10.07%.
It is the fourth highest rate in the G20, a group of the 19 richest countries and a bloc with members of the European Union, according to a survey by the financial technology and analysis company Quantzed.
Turkey and Argentina lead the ranking with rates of 79.6% and 64%, respectively, even differing from the group’s average of 13.7%. Russia is in third place, with an index of 15.9%.
At the bottom end of the table, China, Japan and Saudi Arabia recorded rates of 2.5%, 2.4% and 2.3%, in that order. See the complete list below.
A considerable part of the rise in prices in Brazil has the same causes of inflation in much of the world, as it reflects the imbalances caused by restrictions on activities imposed by the pandemic.
The global rise in prices results, therefore, from the scarce supply of products in the face of a growing demand after the resumption of the movement of people in economies still heated by stimulus packages.
Turkey and Argentina are out of the question, according to Fabio Fares, a macro analysis specialist at Quantzed. He states that the conduct of economic policy has a strong relationship with the soaring cost of living in these countries.
As for Russian inflation, prices are basically influenced by the war. “Russia we know is at war. It’s a closed market. With scarce supply, prices go up.”
For the Quantzed expert, the July deflation shows, however, that the Central Bank of Brazil quickly understood the ongoing inflationary process and gave the necessary response by raising its interest rate before economies less accustomed to dealing with this phenomenon.
“Brazil has, historically, an average of higher inflation than the world, so we deal with it better”, he commented. “The Central Bank had already started to raise its rate when the Fed [Federal Reserve, o banco central americano] still said that inflation was transitory.”
Gustavo Sung, chief economist at Suno Research, reinforces that, in addition to the global supply shock caused by the pandemic, the Ukrainian War has gained space as a relevant component of global inflation by accelerating fuel and food prices.
Threats that could affect price indices again, including in Brazil, with the arrival of winter in the northern hemisphere, which will increase demand for gas and oil derivatives for heating homes in Europe.
“We cannot forget, of course, that we also still have industrial costs pushing inflation here and abroad. Since the beginning of the pandemic, we have suffered from a lack of inputs and parts and the slowness in normalization also puts pressure on”, said Sung.
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