IPCA-15 has new deflation in September, and high in 12 months is below 8%

The IPCA-15 (National Index of Consumer Prices Extended 15) had deflation (fall) of 0.37% in September, informed this Tuesday (27) the IBGE (Brazilian Institute of Geography and Statistics). It is the second consecutive low of the previous inflation index, which had dropped 0.73% in August.

The new deflation was more intense than expected by analysts. Reuters and Bloomberg surveys projected a 0.20% drop in September.

In the 12-month period, the IPCA-15 still registered a high of 7.96%. The advance was 9.60% until August. The accumulated has not been below 8% since May 2021 (7.27%).

Gasoline has the biggest impact on deflation

Despite the deflation in the general index, the prices of only 3 of the 9 groups of products and services surveyed dropped in September, according to the IBGE. The biggest influence came from transport, which fell by 2.35%. The impact was -0.49 percentage point in the month.

Once again, the drop in transport was associated with the decline in fuel (-9.47%), which saw cuts in ICMS (state tax) and a truce in refineries.

Ethanol (-10.10%), gasoline (-9.78%), diesel oil (-5.40%) and vehicular gas (-0.30%) showed declines in September. Gasoline, by the way, had the most intense individual impact (-0.52 percentage point) for deflation among the 367 sub-items surveyed.

There were still decreases in the groups communication (-2.74%) and food and beverages (-0.47%). The two segments had impacts of -0.14 percentage point and -0.10 percentage point, respectively.

On the other hand, the biggest change came from clothing (1.66%), which accelerated in relation to August (0.76%). Also noteworthy is the group of health and personal care, which had the second highest increase (0.94%) and the main positive impact (0.12 percentage points) on the IPCA-15.

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 September data is not yet complete. It will be known on October 11.

The IPCA-15, as it is released earlier, signals a price trend. The prior indicator is usually collected in the second half of the previous month and in the first half of the reporting month — in this case, August and September.

The shortage of goods and services put pressure on the Jair Bolsonaro government (PL) on the eve of the elections. The first round of the dispute at the polls is scheduled for next Sunday (2).

The president appears in second place in polls of voting intentions, behind former president Luiz Inácio Lula da Silva (PT).

To try to reduce the electoral impact of the loss of consumer purchasing power, Bolsonaro bet on a package of boosted benefits, including Auxílio Brasil, and on cutting taxes, which reached part of prices.

At the end of June, the president sanctioned the ceiling for charging ICMS (state tax) on fuel, electricity, transport and telecommunications. The measure resulted in lower prices for products such as gasoline.

Even with the recent truce, the IPCA-15 in 12 months remains far from the inflation target pursued by the BC (Central Bank) for the IPCA. The center of the reference measure is 3.50% in 2022. The ceiling was set at 5%.

With the tax cut on fuels, financial market analysts began to reduce projections for the IPCA in 2022.

The high forecast by the market for the official index is 5.88% until December, according to the median of the Focus bulletin, published by the BC on Monday (26). If the estimate is confirmed, Brazil will have the second consecutive year of exceeding the inflation target.