Onion price nearly doubles in 12 months; see the 10 biggest highs of inflation

Until August, 183 of the 377 sub-items of the IPCA (Broad Consumer Price Index) still registered inflation of 10% or more in the accumulated 12 months.

In other words, almost half of the goods and services surveyed (48.5%) continued with a double-digit increase, according to data released this Friday (9) by the IBGE (Brazilian Institute of Geography and Statistics).

Inflation measured by the IPCA in 12 months, in general terms, decelerated to 8.73% until August, after 10.07% until July. The cumulative was above 10% since September 2021 – almost a year. A sequence as long or longer has not occurred since the 2002-2003 interval.

According to the IBGE, 7 of the 10 highest increases until August came from food and beverages. Onions were the sub-item that increased the most in 12 months: 91.21%.

“The planted area was smaller this year. It contributed to a reduction in supply and an increase in prices. Production at the beginning of the year is more concentrated in the South, then it spreads”, stated Pedro Kislanov, IPCA research manager.

After onions, papaya (81.83%) and melon (79.34%) registered the highest price increases in 12 months.

Airfare (74.94%), watermelon (61.88%), long-life milk (60.81%), diesel oil (53.16%), mango (47.05%), ground coffee (46.34 %) and transport by application (43.80%) complete the list of the ten biggest advances.

Over the course of 2022, the number of sub-items with cumulative inflation of 10% or more reached 200 in the 12 months ending in June. The amount rose to 193 in July and dropped back in August to 183.

Despite the drop, the most recent number is still higher than at the beginning of the year. In January, 128 sub-items had inflation of 10% or more. The data released this Friday by the IBGE also exceeds that of a year ago (135 in August 2021).

“We have achieved some victory against inflation, but it is not a rout”, says Alexandre Espirito Santo, chief economist at Órama.

He draws attention to the diffusion index calculated by the IBGE. This indicator measures the percentage of sub-items that rose each month in relation to the total survey.

After three months of decline, diffusion increased in August, from 63% to 65%. This means more goods and services on the rise compared to July, although the index remains below previous months. Throughout this year, it reached 78% in April.

“Diffusion has gone up again, showing that inflation is still here, persistent. But the 65% rate is not hopeless. We have already achieved some victory”, says Espirito Santo.

“It’s not a benign scenario, but it’s much more comfortable than it was months ago. My biggest concern at the moment is with service inflation, which is still strong,” he adds.

In August, the IPCA had deflation (fall) of 0.36%, according to data released this Friday by the IBGE. The decrease was the second in a row and was once again concentrated in products such as gasoline, target of cutting ICMS (state tax) rates on the eve of the elections.

If on the one hand there was a drop in fuels, other products such as personal hygiene, clothing and part of food showed increases.

“The disinflation process is gradual. There are items that show disinflation and others that will fall even more slowly”, says Julia Gottlieb, economist at Itaú Unibanco.

According to the expert, the bank should soon reduce its estimate for the IPCA in 2022. For now, the projected advance is 7%.

C6 Bank revised its forecast on Friday. The institution lowered the estimate for the 2022 IPCA from 6.5% to 6%. For 2023, it maintained the projection at 5.7%.

“We believe that going forward, after the strong temporary relief from tax cuts, inflation will remain high and gradually decelerate”, says a report from the C6 economic area, led by economist Felipe Salles.