Brazil has 8th highest inflation among 20 major economies

Brazil moved away from the top of the inflation ranking among the main economies in the world. After 16 of the 20 members of the G20 (a group of the 19 richest countries and a bloc with members of the European Union) have disclosed the August inflation, Brazil is in 8th position, according to data compiled on the Bloomberg platform.

Before, Brazil was in 4th place, considering a survey carried out in the first half of August with data referring to July.

There are two main reasons for this change in position. The first is the record of the second consecutive month of decline in the IPCA (Ample National Consumer Price Index) in Brazil, which in August was pulled down by the decline in fuel prices.

This caused inflation to fall to 8.73% in the 12 months through August, after having remained at 10.07% until the previous month.

The other cause for Brazil’s fall in the inflation ranking was the acceleration of consumer prices in the main European economies.

Inflation accumulated in the 12 months through August in the euro zone reached a record high of 9.1%, according to data released by the European Union statistics office Eurostat last Friday (16). It is the highest rate since the creation of the euro in 1999.

The United Kingdom (9.9%), Italy (9.1%) and Germany (8.8%) also appear ahead of Brazil in the ranking.

Turkey remains firmly at the top, with inflation at 80.2%. Also on the podium are Argentina, with a rate of 69.2%, and Russia, with 14.3%.

Positioned at the center of the ranking, the United States also announced last week that its 12-month accumulated price index stood at 8.3%, after a surprising rise of 0.1%. Economists were projecting deflation of 0.1%.

The anticipation of the Brazilian Central Bank in relation to the main economies regarding the policy of raising interest rates and the measures adopted by the federal government to reduce the cost of fuels, especially the reduction of ICMS rates, were the main measures responsible for having placed Brazil’s inflation in decline relative to the G20 countries, according to Fabio Fares, a macro analysis specialist at Quantzed.

“Brazil knows how to deal with inflation because, unfortunately, it is already used to it”, commented Fares.

Nicola Tingas, economist at Acrefi (National Association of Credit, Financing and Investment Institutions), draws attention, however, to the fact that inflationary prospects for Brazil are far above the targets set by the Central Bank for it and for next years.

“Despite the accommodation of some prices, such as oil, which led to a downward revision of the IPCA, we will hardly reach the end of 2022 within the ceiling of the 5% target”, he commented.