The IPCA-15 (Extended National Consumer Price Index 15) had deflation (fall) of 0.73% in August. It is the lowest rate since the beginning of the historical series, which began in November 1991, informed the IBGE (Brazilian Institute of Geography and Statistics) this Wednesday (24th).
The drop was driven by the decline in fuel prices, especially gasoline, and electricity. In both cases, there was an impact of tax cuts approved on the eve of the elections. Food and beverage prices, on the other hand, continued to rise.
Analysts consulted by the Bloomberg agency projected a more intense decline in August, of 0.82%. In July, the IPCA-15 had registered (high) inflation of 0.13%.
Despite the truce, the index still accumulated an advance of 9.60% in 12 months. In this cut, the high was 11.39% until last month.
The official inflation index in Brazil is the IPCA (National Broad Consumer Price Index), also released by the IBGE. As the IPCA variation is calculated over the reference month, the data for August is not yet complete. It will be known on the 9th of September.
The IPCA-15, as it is released earlier, signals a price trend. The leading indicator is usually calculated between the second half of the previous month and the first half of the reference month of the disclosure. In this case, the IPCA-15 collection took place from July 14 to August 12.
The famine on the eve of the elections puts pressure on the Jair Bolsonaro (PL) government, which fears the effects of the loss of purchasing power for Brazilians.
To try to reduce the damage, the president bets on a package of boosted benefits, including AuxÃlio Brasil, and on cutting taxes, which have already reached part of the prices.
In the final stretch of June, Bolsonaro sanctioned a project that defined a ceiling for charging ICMS (state tax) on fuel, electricity, transport and telecommunications. The measure resulted in lower prices for products such as gasoline.
Fuels and light recede
According to the IBGE, 6 of the 9 groups surveyed in the IPCA-15 rose in August. This month’s deflation was driven by the fall in the transport group (-5.24%). The segment contributed -1.15 percentage points to the overall result.
The variation in transport was impacted by the drop in fuel (-15.33%). Gasoline dropped 16.80%, with the largest individual contribution to deflation (-1.07 percentage points).
There were also drops in ethanol (-10.78%), vehicle gas (-5.40%) and diesel oil (-0.56%). Airfare (-12.22%) was another low sub-item, after four consecutive months of highs.
There was also a decrease in the housing (-0.37%) and communication (-0.30%) groups. The decrease in housing was associated with the decrease in residential electricity (-3.29%).
The IBGE highlighted that states reduced ICMS rates on electricity bills. In addition, Aneel (National Electric Energy Agency) approved extraordinary tariff reviews from different distributors, which also generated relief, according to the institute.
Food goes up again
Food, on the other hand, continued to rise in August. The biggest increase among the groups came precisely from food and beverages: 1.12%. The advance had been even more intense in July (1.16%).
The food and beverage group also recorded the main upward impact on the IPCA-15: 0.24 percentage point. The result was influenced by the increase in the prices of long-life milk.
The product soared 14.21% in August. It was the biggest positive individual impact on the index for the month (0.14 percentage point).
Other highlights came from fruits (2.99%), cheese (4.18%) and chicken pieces (3.08%). Food at home rose 1.24% in August. Food outside the home increased by 0.80%.
Inflation far from target
In the 12-month period, the IPCA-15 remains far from the inflation target pursued by the BC (Central Bank) for the IPCA. The center of the reference measure is 3.50%, with a tolerance margin of 1.5 percentage points up (5%) or down (2%).
With the tax cut on fuels, financial market analysts began to reduce projections for the IPCA in 2022. Even so, the country is heading towards the second consecutive year of noncompliance with the inflation target.
The high forecast by the market for the IPCA is 6.82% until December, indicated the median of the Focus bulletin published on Monday (22) by the BC.
According to analysts, the loss of tax revenue brings risks to the fiscal framework, with possible negative impacts on inflation further down the road.
To try to contain the famine, the BC has been raising interest rates. The basic rate, the Selic, went to 13.75% per year in August. The rise challenges the recovery of household consumption and makes productive investments by companies more expensive.
On Tuesday (23), the president of BC, Roberto Campos Neto, said that Brazil will have two or three months of falling prices. According to him, inflation will end 2022 at around 6.5% or a little lower.
I have over 8 years of experience in the news industry. I have worked for various news websites and have also written for a few news agencies. I mostly cover healthcare news, but I am also interested in other topics such as politics, business, and entertainment. In my free time, I enjoy writing fiction and spending time with my family and friends.
