The gap between the inflation of the poor and the rich is the biggest since 2020

The difference between the inflation of the richest 10% and the poorest 10% increased in July in the income brackets used to calculate the FGV’s CPI (Consumer Price Index).

After the measures that reduced fuel prices and other values ​​controlled by the government, this difference reached 0.69 percentage point, the highest value since December 2020 (0.81 point).

While families in the range of 1 to 1.5 times the minimum wage had deflation of 0.36% last month, those with incomes between 11.5 to 33 times the minimum wage saw a price drop of 1.05% — practically triple.

The explanation for this difference is that food prices, the item that weighs the most in the low-income basket, were accelerating in 2020, the same movement registered today. On the other hand, the inflation of items such as transport, education and recreation, which weigh more in the budget of high income, is falling.

The transport group, influenced by the reduction in gasoline prices and taxes, registered deflation of 3.66% for the poorest and 4.68% for the richest. That is, 1 percentage point more in the highest income bracket.

In 12 months, the FGV’s CPI accumulates a high of 7.82% for the poorest and 7.43% for the richest. In food, the increase is 16.2% and 13.8%, respectively, in the two ranges.

The trend is for this movement to increase in the coming months, given the institution’s projection that foodstuffs will end the year with inflation above 10%. Prices controlled by the government should close 2022 with deflation.

Economist André Braz, from FGV Ibre (Brazilian Institute of Economics of Fundação Getulio Vargas), says that the poorest also suffer from the lack of protection against price increases, since the richest have access to financial products that guarantee return on your money.

“The poorest individual feels less of these effects of ICMS reductions and has no protection against the inflationary process. For them, the feeling of inflation is in food.”

The economist at FGV Ibre says that food inflation in 12 months may have reached its peak this year in July, to start a deceleration in the coming months. Still, it should close the year in double digits.

“Food inflation should subside due to this slowdown in large economies. We have seen that agricultural commodities have fallen a lot. Grains can help to slow down inflation from now on, which will be good for the less favored” , says.

In July, the IPCA (Extended National Consumer Price Index), the country’s official inflation index calculated by the IBGE, deflated by 0.68%.

The fall was concentrated in 2 of the 9 groups of products and services surveyed: transport (-4.51%) and housing (-1.05%). Both were influenced by recent cuts in ICMS, state tax, fuel and energy rates. If it weren’t for this drop, the IPCA for July would have risen 0.70%, according to the IBGE.

The reduction in gasoline prices promoted by Petrobras also contributed to the month’s result.

For August, the market projects deflation of 0.20%, but the new gasoline price reduction announced on Monday (15) could lead to a greater drop.

According to another indicator, the IPC FX, Fipe’s index that measures inflation in the city of São Paulo by income bracket, the deflation in consumer prices registered in July only benefited families with monthly income above eight minimum wages (R $9,696).

The difference in price indices is due to factors such as geographic coverage, methodology and collection period, among others.