Pressured by food, the official inflation index in Brazil started 2022 with a high of 0.54% in January, informed this Wednesday (9) the IBGE (Brazilian Institute of Geography and Statistics).
This is the highest result in the month for the IPCA (Broad Consumer Price Index) in six years. That is, since January 2016 (1.27%), when the country’s economy was going through a period of recession.
The 0.54% variation was in line with financial market expectations. Analysts consulted by the Bloomberg agency projected a rate of 0.55%.
The result even signals a deceleration compared to December 2021, when the advance had been 0.73%, but the IPCA remains in double digits in the 12-month period.
The accumulated increase until January reached 10.38%, the highest since November 2021 (10.74%). In the 12-month period up to January, the rate is the highest since 2016 (10.71%).
The IPCA is far from the inflation target pursued by the BC (Central Bank). The center of the benchmark measure this year is 3.50%. The ceiling is 5%.
According to analysts, the index should exceed the target in 2022. If the estimate is confirmed, it will be the second consecutive year of noncompliance. In 2021, the IPCA advance until December was 10.06%.
To try to contain inflation, the BC has been raising the basic interest rate, which reached 10.75% last week. The side effect of the higher Selic is to inhibit productive investments in the economy, as credit lines are more expensive in the country. The reduction in investments, in turn, threatens job creation and economic recovery.
Food pulls high in January
According to the IBGE, eight of the nine groups of products and services surveyed had their prices high in January. The monthly increase in the IPCA was influenced, mainly, by food and beverages (1.11%). The group had the biggest impact on the index for the month (0.23 percentage point).
According to André Filipe Almeida, an analyst at the IBGE, the rise in food prices may be partly associated with adverse weather events.
At the beginning of the year, states such as Minas Gerais and Bahia felt the effects of heavy rains, while the southern region suffered a period of drought.
“In natura products have the climate as one of the main factors for determining the quantity produced and offered”, said Almeida. “These climatic factors end up influencing the quantity and even the quality of the products”, he amended.
In food and beverages, the main highlights were meats (1.32%) and fruits (3.40%). Although they decelerated in relation to the previous month, the items accounted for the greatest impacts on the group.
The prices of ground coffee (4.75%) rose for the 11th consecutive month. Other highlights were carrots (27.64%), onions (12.43%), potatoes (9.65%) and tomatoes (6.21%).
On the other hand, the main declines in food and beverages came from rice (-2.66%), whole chicken (-0.85%) and chicken pieces (-0.71%).
The IBGE also pointed out that the deceleration of the IPCA from December to January (from 0.73% to 0.54%) was impacted by the transport group.
The segment retreated 0.11%, after rising 0.58%. This was the only one of the nine groups of products and services surveyed that fell in January.
According to the institute, the decline reflects the drop in prices for air tickets (-18.35%) and fuel (-1.23%). In addition to gasoline (-1.14%), there was also a drop in ethanol (-2.84%) and vehicle gas (-0.86%).
“The drop in airfares can be explained by the seasonal component”, pondered Almeida. “Regarding fuels, the negative adjustments applied to refineries by Petrobras in December help to understand the decline in prices in January,” he added.
In the view of economist André Braz, a researcher at FGV Ibre (Brazilian Institute of Economics of the Getulio Vargas Foundation), last month’s data show a “spreading of inflationary pressures”.
In January, the diffusion index calculated by the IBGE was 73%. It was the second consecutive time above 70%. In December, the indicator was at 75%.
The index measures the percentage of products and services that showed price increases, in a sample with 377 IPCA sub-items. The higher it is, the more diffuse inflation is.
“In February, we will not have the negative contribution of gasoline. There will already be a positive sign, because, before the end of the first half of January, an increase in the refineries was announced. We will still have the readjustments of the schools”, says Braz .
“We must have an inflation very similar to the one we experienced last month. This means that inflation must offer little respite”, he adds.
Among the 16 capitals and metropolitan regions surveyed by the IBGE, Curitiba (PR) has the highest accumulated variation in 12 months. The high until January was 12.77%. Then come Rio Branco (AC), with 11.90%, and Vitória (ES), with 11.65%.
Belém (PA) is at the other end of the list, with an accumulated IPCA of 8.84%. It is the smallest among the metropolises. São Paulo registers inflation of 10.02%.
series pressures
Throughout the crisis, there was an increase in administered prices, such as fuel and electricity, food shortages and persistent disruption of the global chain of industrial inputs.
In Brazil, the higher dollar was an additional component as it intensified inflationary pressure. The exchange rate, which impacts items such as fuel, rose amid the political turmoil carried out by the Jair Bolsonaro (PL) government.
The general increase in prices punishes especially the poorest, who have less financial conditions to face the famine. In the midst of this context, Brazil began to record a succession of scenes of groups in search of donations and even leftover food for food.
The financial market projects inflation of 5.44% in the accumulated until December 2022, points out the most recent edition of the Focus bulletin, released by the BC.
The estimate has been revised upwards in recent weeks due to the risks that remain in the scenario. Some analysts already predict a higher IPCA, above 6%.
“The projections have been revised upwards. Today I would say that inflation should be between 6% and 6.5%”, points out economist Fábio Astrauskas, managing partner of Siegen Consultoria.
“The biggest challenge is to disarm the inflationary memory. Several countries are dealing with this at the moment”, he adds.
Among the threats in the fight against rising prices are the uncertainties of the electoral race, which usually impact the exchange rate, and the pressure of oil, which has effects on fuels in Brazil.
There is also fear of the possible consequences of adverse weather. The drought in the southern region, for example, can generate new advances in food prices.
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