Fuels rise again, food pressures and IPCA-15 accelerates to 0.53% in November

Fuel prices rose again and added to the pressure from food to push the IPCA-15 to accelerate upwards in November, marking the highest pace of advance in five months.

The advance of the IPCA-15 (National Consumer Price Index-15) increased to 0.53% in November, after rising 0.16% in the previous month, according to data from the IBGE (Brazilian Institute of Geography and Statistics) released this Thursday (24)

This is the highest monthly rate since June, when the IPCA-15 increased by 0.69%.

Despite the acceleration, the index considered prior to official inflation registered a high of 6.17% in the 12 months up to November, from 6.85% in October.

The result thus indicates that Luiz Inácio Lula da Silva will start his third term as president, in 2023, with inflation above the ceiling of the official target for this year — 3.5%, with a margin of 1.5 percentage points for more or less , measured by the IPCA and already abandoned by the Central Bank.

Expectations in a Reuters survey for the November IPCA-15 were for an advance of 0.56% on a monthly basis and 6.21% in 12 months.

Inflation resumes its upward trend this year-end after having reached deflation thanks to government measures and the fall in fuel costs.

In November, the biggest impacts on the IPCA-15 came from increases of 0.54% in the costs of Food and beverages and of 0.91% in Health and personal care.

In the case of food, the result was influenced by the increase of 0.60% in food for consumption at home, with tomatoes (17.79%), onions (13.79%) and potatoes (8.99%) in emphasis.

The 0.49% increase in Transport costs, after a drop of 0.64% in October, also helped to pressure the IPCA-15 result.

Fuels rose again after five consecutive months of declines, with a rise of 2.04%, showing that the effects of the reduction in the ICMS rate on fuels, energy and telecommunications have dissipated.

In November, gasoline rose 1.67%, after falling 5.92% in the previous month, exerting the greatest individual impact on the index for the month. The prices of ethanol and diesel oil also advanced, respectively, 6.16% and 0.12%.

To combat inflation, the Central Bank raised the interest rate to the current 13.75%, the level at which it should end the year. BC president Roberto Campos Neto recently stated that inflation shows “incipient” signs of improvement, but reinforced that it is too early to celebrate and that the country needs to persist in the fight against inflation.

Campos Neto has also been warning of the importance of fiscal balance for social inclusion, after president-elect Luiz Inácio Lula da Silva criticized fiscal austerity and the spending cap rule. There is still no final text of the Transition PEC, which the elected government is seeking to approve to allow for extra spending starting next year.

A Focus survey carried out by the BC with a hundred economists shows that the market expects inflation to end this year at 5.88%.