Inflation in Brazil is among the highest in the world in 2021; see ranking

Brazil ended 2021 with the fourth highest inflation among 44 economies highlighted by the OECD and should end 2022 among the nine highest consumer rates, according to projections and data collected by the institution that brings together the most relevant economies on the planet.

The IPCA (the country’s official inflation index) of 10.06% was surpassed only by the rates of Argentina (51% up to November), Turkey (36% up to December) and Estonia (12.1% up to December) in the selection of countries accompanied by the multilateral institution. If the G20 economies were selected, Brazil would be in third place.

Considering a broader set of countries, last year’s IPCA was in 13th position among the 71 economies that have already released data for December 2021, according to a collection made by the Trading Economics platform.

If the 12-month rates published up to November or December for 147 economies are analyzed, the IPCA is in 28th place —5th position among the countries of the American continent.

Venezuela, with inflation of 686.4%, leads all world rankings. In the Americas, Suriname (63.3%) and Haiti (24.6%) stand out —with data accumulated in 12 months up to November— ahead of Brazil.

Brazilian inflation has surpassed that of other relevant economies on the continent, such as Uruguay (8%), Mexico (7.4%), Chile (7.2%) and the United States (7%) — these with data already closed for 2021.

The US consumer price index represents the highest rate since 1982. The Federal Reserve, the country’s central bank, estimates that high inflation could last until the middle of this year and has already signaled that the institution is ready to take action if the rising prices did not cool down, as the expected rise in interest rates.

The surge in price indices in the second year of the pandemic is explained by several shocks, in demand and supply, and is leading central banks and governments to reduce stimulus to economic recovery.

In Brazil, the IPCA is expected to have reached its peak in 12 months in November (10.7%) and to retreat to around 5% by the end of 2022.

In the letter released on Tuesday (11) to explain the blowing of the inflation target in Brazil, the president of the Central Bank, Roberto Campos Neto, attributed inflation in 2021 to successive cost shocks and emphasized that this is an observed movement. also in other countries.

He highlighted that, in Brazil, there was the additional effect of the energy crisis. He also stated that, although the contribution of the exchange rate to inflation was lower than in 2020, there was a break in the historical pattern of appreciation of the national currency during cycles of rising prices of commodities exported by the country. Thus, the country was doubly affected by the rise in these products.

Campos Neto stated that the exchange rate depreciation trend in the second half of 2021 mainly reflected questions regarding the future of the current fiscal framework. During this period, the government changed the spending ceiling to increase expenditures.

In the document, the BC reiterates that it will maintain the cycle of hikes in the basic interest rate, currently at 9.25% per year, to bring inflation to the target.