Brazil was not the only country to register deflation in July, contrary to what the post says

The assertion that Brazil would be the only country among 194 with deflation is false. In the last 12 months, Brazil has gone through a period of high inflation, with one-off deflation in July. Furthermore, as verified by the Comprova Project, at least four other countries registered deflation in July: Armenia, Spain, Greece and Luxembourg.

In the monthly variation from June to July, Brazil registered a deflation of 0.68% in the IPCA, but this fall occurred after successive increases in inflation levels. In the last 12 months, for example, inflation in Brazil is 10.07%, despite the drop recorded in July. In this context, Brazil has the 4th highest inflation rate among the G20 countries, a group that includes the largest economies in the world.

The drop in the IPCA registered in July in Brazil also does not mean that there was a generalized reduction in the prices of all products and services sold in the country. According to experts, this drop is mostly due to the decrease in the price of items such as fuel and electricity tariffs.

For Comprova, false is content invented or edited to change its original meaning and deliberately disclosed to spread a falsehood.

Scope of publication

The post analyzed here was made in a public group in support of President Jair Bolsonaro on Facebook on August 11. As of August 17, the post had 1,600 likes, 734 shares and 273 comments.

what the author says

The report contacted the author of the post through a message on Facebook, but there was no response until the completion of this verification.

How do we check

The first step was to do a Google search with the terms “Brazil” and “deflation”, which led us to news on the subject, such as those published by G1 and DW Brasil. Then, to confirm the data, the IBGE website, responsible for disclosing the IPCA, was consulted.

To obtain data on inflation rates in other countries, the websites of organizations such as the World Bank, IMF (International Monetary Fund) and OECD (Organization for Economic Cooperation and Development) were consulted. Google searches were also carried out in Portuguese and English with terms such as “inflation rates in countries of the world” and “inflation rate by country”. One of the results led us to The Global Economy website, which brings together economic data from different countries around the world with daily updates. After consulting the data published on the platform, Google searches were carried out with terms in other languages ​​to verify, in official sources, the inflation rates of countries that appeared with negative variation in “The Global Economy”.

Finally, to talk about deflation in Brazil and contextualize the presentation of these data, we consulted professor Matheus Abrita, from the State University of Mato Grosso do Sul (UEMS), and professor from Fundação Getulio Vargas Henrique Castro.

One-off deflation, in a general inflation scenario

The IBGE announced on August 9, one day before the publication of the verified content, that the IPCA, the official indicator of inflation in Brazil, registered a deflation of 0.68% in July. This means that the average cost of living for families with a monthly income of 1 to 40 times the minimum wage (a cutoff defined by the IBGE for the IPCA) dropped by 0.68% over the course of that month.

To calculate the IPCA, IBGE analyzes the prices of 377 goods and services — in nine different categories, from food to communication — in 16 capitals, including Brasília. The index is defined by a weighted average of these prices, based on the category. as reported by Sheet in March, the category with the greatest impact at the beginning of this year was transport, which includes fuel costs.

This is the first time that the IPCA has registered deflation since May 2020, when the shock of the first two months of the pandemic, with social isolation, led to a drop in demand for goods and services, especially those considered “non-essential”. Soon, these goods and services were devalued and, thus, the cost of living went down. April and May of that year registered deflation of 0.31% and 0.38%, respectively. The effect was temporary, as the IPCA returned to register inflation in every month since then. In the case of July this year, deflation took place in the midst of an accumulated inflation rate of 10.07% in the last 12 months.

As the doctor in economics and professor at UEMS Mateus Boldrine Abrita explained to Comprova, the July deflation was not naturally driven by the law of supply and demand, as occurred in the first two months of the pandemic. The 0.68% drop in prices in the last month was mainly caused by cuts in the Tax on the Circulation of Goods and Services (ICMS), resulting from Complementary Law No. the collection of tax on various goods and services, especially fuel.

Therefore, according to the expert, the idea of ​​deflation in Brazil is a “half truth”. “The whole world is in a scenario of inflation and so is Brazil. And if you look at it, inflation in the year is high. If you look at the specific month in which the ICMS dropped, it had deflation because of this measure. same month, the price of food went up, several other items went up”, he explains.

Professor Henrique Castro, from the economics course at FGV, also adds that, strictly speaking, it would be correct to speak of deflation if there was a generalized drop in prices for different items in the Brazilian consumer’s basket, which did not happen. “The index observed in the last month was punctual and reflected the performance of the price of gasoline and electricity, which does not represent a great relief in the cost of living of Brazilians, especially for the poorest families, who have most of their your expenses”, he evaluates.

The food and beverage group registered the highest IPCA inflation in July: 1.30%. Therefore, as pointed out by experts, it is incorrect to say that Brazil is going through a moment of deflation, considering that, in the accumulated of recent months, inflation is 10.07%, above the target stipulated by the Central Bank for this year, which is 3.5%, with a tolerance of 1.5 plus or minus.

According to a study conducted by Fipe (Fundação Instituto de Pesquisas Econômicas), accumulated food inflation in 2022 is approaching 13%, while the general average is 5.5%. Fipe, which calculates inflation by social class, points out that, so far, the drop in fuel prices has mainly benefited families who own a car. In July, families with a monthly income of BRL 9,000 experienced deflation of 0.11%, while the poorest, with a monthly income of one to three minimum wages, actually faced inflation of 0.44%.

Other countries

The comparison of the variation of the price level registered among all the countries of the world depends on the gathering of the inflation indices of all these countries referring to the same period of time and aggregated according to the same parameters. Although the post analyzed here did not specify which period it referred to, to make the comparison with other countries, Comprova was based on the monthly variation of July, a period in which Brazil registered deflation.

Institutions and multilateral economic bodies, such as the World Bank, the IMF and the OECD, gather data on inflation rates, but the numbers available on the websites of these organizations are presented in an annual perspective, and without recent updates, which prevents the comparison of the variation. monthly price level.

The Global Economy website, which is not linked to any multilateral body and claims to be based on official sources to present “reliable information for researchers, businessmen, academics and investors”, gathers economic data from several countries in the world, among them, the inflation and its monthly variations.

Among all the statistics presented, Comprova took into account only the countries whose most recent data referred to the month of July 2022 and whose percentage variation presented was negative, that is, indicating that there was a reduction in the price level in July compared to to the previous month. Based on this, Comprova sought to confirm the inflation rates indicated by “The Global Economy” with official or government bodies in these countries. In addition to Brazil, it was possible to confirm that at least four other nations showed deflation in July: Armenia, Spain, Greece and Luxembourg.

In Armenia, the negative variation between June and July was 1.4% in the country’s general price index, according to a document published by the country’s Statistical Committee. In Spain, deflation in July was 0.3%, according to data from the Spanish National Institute of Statistics and Spanish media outlets (such as RTVE and Ámbito Financiero).

In Greece, prices fell by 1.44% in July, as reported by the Hellenic Statistical Authority, an independent organization linked to the Greek parliament, in a publication on August 8th. Finally, Luxembourg also registered deflation in July, with a negative 1% change in the price level, as reported by the statistics portal of the government of Luxembourg.

However, as Professor Matheus Abrita explains, each country may have different methodologies to determine its inflation rates, which can sometimes invalidate some comparisons. “Brazil adopts international standards in the measurement of the price level by the IBGE, however, other nations, which are not democracies, for example, may not present true data, or with different methodologies”, he explains.

Professor Henrique Castro, from FGV, points out that, in addition to possible differences in the methodologies adopted to measure price variations, such as the selection of different consumption baskets, countries have different inflation rates according to their stages of development and their economic growth rates. “Therefore, comparing rates between very different countries can be of little use. Ideally, it would be correct to compare rates between countries in the same trading bloc and at the same stage of economic development,” he said.

Taking into account the G20, a group of the largest economies in the world, Brazil has the fourth highest inflation rate in the last 12 months. With an inflation of 10.07%, Brazil is behind only the rates observed in Russia (15.9%), Argentina (64%) and Turkey (79.6%), according to a survey by the analysis and technology company. financial Quantzed, released by Sheet.

According to the IMF, in relation to South American countries and taking into account only the year 2022, with data referring to the last month of April, inflation in Brazil is 8.2%, the 5th highest among 12 countries on the continent with available data, behind Paraguay (9.4%), Suriname (38.9%), Argentina (51.7%) and Venezuela (500%).

Why do we investigate?

Comprova investigates suspicious content that went viral on social media about the pandemic, public policies of the federal government and presidential elections. The assertion that Brazil would be the only country in deflation after months of inflation on a global scale, associated with a successful administration by the current president, seemed suspicious at the time of an electoral race.

Recently, the Comprova Project carried out other investigations on topics related to the economic agenda. As an example, it was shown that there are other countries with a positive economic scenario besides Brazil, unlike what Pastor says.