Food inflation is the highest until September since the beginning of the Real Plan

Despite recent signs of a truce in prices in Brazil, the food and beverage group still accumulates inflation of 9.54% in the year, from January to September.

It is the highest increase for the first nine months of the calendar in 28 years, or since the beginning of the Real Plan, according to data from the IPCA (Ample National Consumer Price Index) consulted by the Sheet.

This is the most intense increase for the accumulated from January to September since 1994 (915.08%), when Brazil was still experiencing the reflex of hyperinflation.

The IPCA, calculated by the IBGE (Brazilian Institute of Geography and Statistics), is the country’s official price index.

According to analysts, the food shortage reflects a series of factors in 2022. At the beginning of the year, heavy rains affected crops in regions such as the Southeast. The South, on the other hand, suffered a period of drought.

Weather extremes reduced the supply of various goods, such as vegetables, which affected prices.

There was also cost pressure. Inputs used in the field became more expensive during the pandemic, increasing spending on food production.

The situation was intensified by the Ukrainian War. Agricultural commodities rose in prices after the beginning of the conflict, in February. The war also generated additional pressure on input prices on the international market.

“The diagnosis is still high inflation”, says economist Luca Mercadante, from Rio Bravo Investimentos.

“It’s an inflation that has an important impact, that weighs on people’s lives. They realize that”, he adds.

In September, the food and beverage group even dropped 0.51% in the IPCA. It was the lowest since May 2019 (-0.56%) and the first since November 2021 (-0.04%).

As a result, the inflation accumulated in the year decelerated from 10.10% until August to 9.54% until September. In the 12-month period, the increase went from 13.43% to 11.71%.

The lull in September was pulled by long-life milk, which had previously soared amid the off-season.

“We have a slowdown. September was a sign of this, mainly due to milk”, says economist Raphael Rodrigues, from BV bank.

Analysts estimate that foodstuffs tend to remain at a high price level until December, but with more moderate advances than at the beginning of the year. For now, projections do not signal further deflation for the group until the end of 2022.

“Tends to slow down, but should continue pressured, including in 2023”, indicates Rodrigues.

He adds that, before the pandemic, food prices such as meat were already on the rise, due to mismatches between supply and demand.

Food inflation puts pressure on President Jair Bolsonaro (PL) in this year’s electoral race.

Famine affects mainly the poorest population, because the purchase of food consumes a larger share of the budget of these families compared to higher income groups.

In an attempt to surpass former president Luiz Inácio Lula da Silva (PT) in the second round of elections, Bolsonaro seeks to improve his approval among the most vulnerable voters, a pillar of the PT campaign.

In this sense, the federal government announced the expansion of Auxílio Brasil to R$ 600 as of August. The benefit is intended to increase the purchasing power of the poorest in the election year, while food inflation still weighs heavily on Brazilians’ pockets.

In the year, melon was the food that increased the most within the IPCA. The rise in prices reached 74.37% until September.

Onion (63.68%) and long-life milk (50.73%) followed. Tomatoes, on the other hand, had the biggest drop (-28.01%).

Aid only buys basket in five capitals

In September, the average price of the basic food basket decreased in 12 of the 17 capitals that are part of a monthly survey by Dieese (Inter-Union Department of Statistics and Socioeconomic Studies).

Even so, only 5 of the 17 metropolises surveyed had a basic food basket below R$ 600, the value of Auxílio Brasil.

The five are in the Northeast: Aracaju (R$518.68), Salvador (R$560.31), João Pessoa (R$562.32), Recife (R$580.01) and Natal (R$581.53 ).

São Paulo, on the other hand, continued with the most expensive basic food basket in September: R$ 750.74. Florianópolis (R$746.55), Porto Alegre (R$743.94) and Rio de Janeiro (R$714.14) followed.

In addition to expanding Auxílio Brasil, Bolsonaro also bet on cutting taxes to alleviate inflation, which affected items such as fuel and electricity.

In September, the IPCA, in general, dropped 0.29%. Deflation was the third in a row, driven by lower gasoline prices.

Oil, however, has risen again in recent days, which puts pressure on fuel prices in Brazil. Petrobras has been avoiding transfers to refineries on the eve of the second round of elections.

Even so, after 15 weeks of decline, the average value of gasoline began to advance at Brazilian stations, according to a weekly survey by the ANP (National Agency of Petroleum, Gas and Biofuels). The fuel was sold at R$4.86 per liter, on average, last week.