Pressured by the prices of education and food, Brazil’s official inflation index rose 1.01% in February, informed the IBGE (Brazilian Institute of Geography and Statistics) this Friday (11).
It is the largest variation of the IPCA (National Broad Consumer Price Index) for the month since 2015 (1.22%).
The result came above financial market expectations. Analysts consulted by the Bloomberg agency projected a rate of 0.95%. The advance in February means an acceleration compared to the previous month, when the rate was 0.54%.
Thus, the IPCA reached 10.54% in the 12-month period. In the January release, the accumulated rate was 10.38%.
As of March, inflation tends to receive new pressure, with the economic consequences of the war between Russia and Ukraine, which begin to worsen analysts’ forecasts for the year.
The conflict has already triggered a surge in commodities such as oil, generating a mega-increase in fuel prices in Brazil. this week.
By remaining in double digits, the IPCA remains 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 IPCA should exceed the target in 2022. If the estimate is confirmed, it will be the second consecutive year of noncompliance. In 2021, the index increased by 10.06%.
Education and food pull monthly high
In February, all nine groups of products and services surveyed by the IBGE had price increases.
The education segment registered the main impact (0.31 percentage point) and the greatest change (5.61%) in the month’s IPCA. The increase reflects the monthly fee readjustments at the beginning of the school year.
Within education, the biggest impact, 0.28 percentage point, came from regular courses, which rose 6.67%, with emphasis on elementary education (8.06%), pre-school (7.67%) and secondary education. average (7.53%).
“The increase in the IPCA in the month is closely related to education,” said Pedro Kislanov, IBGE survey manager.
Among the groups, the second highlight last month was food and beverages. The rise in prices in this segment reached 1.28%, with a contribution of 0.27 percentage points to the overall result.
According to Kislanov, the advance of food is explained by the adverse weather at the start of 2022. While municipalities in the Southeast recorded excess rain, the South is experiencing a period of drought.
The extremes hampered the cultivation of sundries, impacting supply and prices. The IBGE highlights the surge in foods such as potatoes (23.49%) and carrots (55.41%) in February.
In the last 12 months, what weighed the most on inflation, in general, was fuel, according to the IBGE. The advance reached 33.33%. In February, however, there was a drop of 0.92%, the third in a row.
Another data that drew attention in the IBGE’s disclosure was the so-called diffusion index, which was above 70% for the third consecutive month.
The indicator measures the percentage of products and services with high prices, in a sample with 377 components. In practice, greater diffusion signals that inflation is more widespread throughout the economy.
In February, the diffusion index reached 75%, above January (73%) and at the same level as December (75%). In February 2021, the mark was lower, at 63%.
New cars (1.68%), for example, rose for the 18th consecutive month. The increase accumulated since September 2020 is almost 23%, under the impact of the disarticulation of the automotive sector’s production chains in the pandemic.
War puts pressure on fuel and food
For 2022, analysts even project a lower rate than last year (10.06%), but concerns have grown again due to the effects of the war between Russia and Ukraine.
With tension in Eastern Europe, agricultural commodities and oil soared on the international market. The reflexes of this appreciation began to appear with greater force in Brazil in recent days.
Due to the advance of oil, Petrobras announced on Thursday (10) a mega-increase in fuel prices at refineries – an 18.8% increase in gasoline, a 16.1% increase in cooking gas and a 24.9% increase. % in diesel oil.
The decision of the state-owned company should reach the IPCA from March. Anticipating the possible effects of oil on fuels and possible pressures from agricultural commodities on food in Brazil, analysts have pushed inflation estimates up for 2022.
Economist André Braz, from FGV Ibre (Brazilian Institute of Economics of Fundação Getulio Vargas), raised his forecast for the IPCA from 6.2% to 7.5%.
The bias is high. That is, the predicted number may be even higher in the coming weeks, according to Braz.
“It’s not just the impact of fuels. Commodities such as corn, soybeans and wheat are also rising and can contaminate inflation”, he points out.
“There are also the indirect effects arising from increases in fuel prices. Freight becomes more expensive, urban public transport can become more expensive”, he adds.
According to Braz, the IPCA may continue above 1% in March, due to the mega-increase. The previous projection was for a rise close to 0.7% this month.
“The impact of fuel will not be 100% in March. This increase will not only impact this month’s inflation, but also next month’s. In April, it could approach 1% again, with the pressure that will go beyond fuel”, says Braz.
Kislanov, from the IBGE, also mentioned that the increase in items such as gasoline and diesel should cause increases along the production chains. However, the researcher reported that it is still necessary to wait to see the magnitude of the advances.
higher interest
As reported by the sheetthe mega-increase in fuel prices could set off a vicious cycle of more inflation, interest and public debt in the Brazilian economy.
Persistent inflation may require the Copom (BC Monetary Policy Committee) to reinforce interest rate hikes throughout 2022 — and keep the base rate high for longer next year.
In an attempt to contain the advance of prices, the collegiate took the Selic to 10.75% per year at the most recent meeting, in February.
Part of the market already sees the rate above 13% at the end of this year. The next Copom meeting is scheduled for March 15th and 16th.
Before the war in Ukraine, Brazilians had already felt the rise in inflation. Throughout the pandemic, there was a shortage of food and persistent disruption of the global supply chain, which put pressure on industrial goods.
Administered prices, such as fuel and electricity, also became more expensive.
In Brazil, the higher dollar became an additional component as it intensified the 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.
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