Inflation measured by the IPCA (National Consumer Price Index – Broad) accelerated to 1.06% in April, as reported this Wednesday (11) by the IBGE (Brazilian Institute of Geography and Statistics).
It is the biggest change for the month since 1996. In the 12 months until April, inflation hit 12.13%, the highest level since October 2003 (13.98%). In March 2022, the IPCA had already weighed on Brazilians’ pockets, reaching the highest level in 28 years and rising 1.62%.
In April, the main impacts came from food and beverages (2.06%) and transportation (1.91%). Together, the two groups contributed around 80% of the April IPCA.
The result for the month was in line with what market analysts expected. Those polled by the Bloomberg agency had expected an increase of 1.01%, in the monthly comparison, and of 12.07% in the annual comparison.
In food and beverages, the increase was driven by the increase in food for consumption at home (2.59%). Long-life milk rose by more than 10%. There was also an increase in items such as potato (18.28%), tomato (10.18%), soybean oil (8.24%), French bread (4.52%) and meat (1.02%).
In the case of transport, the increase was driven, above all, by the increase in fuel prices, which continued to rise (3.20%). As in the previous month, the highlight was gasoline (2.48%), the product with the greatest positive impact (0.17 pp) on the index for the month.
New impacts are expected in the coming months, with fuel increases. Since last Tuesday (10), the new diesel increase announced by Petrobras, of 8.87% at refineries, has been in effect, which means a change of R$ 0.40 in the liter of fuel – from R$ 4, 51 for BRL 4.91.
The rise in the price of diesel — which directly interferes with the daily lives of truck drivers and indirectly in the prices of transported products — occurs less than two months after the last rise, on March 11, when the liter of fuel became R$ 0.90 more expensive. .
In the previous month, the inflation of foods that are part of the basic basket had soared in Brazil, surpassing the mark of 20% in the accumulated of 12 months, according to a study of economists of PUCPR (Pontifical Catholic University of Paraná).
The survey cites that the rise in prices came in a context of adverse weather pressures, rising freight costs and the Ukrainian War.
Since last September, the country’s official inflation, measured by the IPCA, has been in double digits in the 12-month period. The index is far from the inflation target pursued by the BC (Central Bank) — which has a center of 3.50% and a ceiling of 5%.
The market already works with this perspective. Credit Suisse, for example, has in recent weeks raised its expectations for consumer inflation in Brazil to 8.3% this year and 4.6% next, citing successive surprises in relation to the spread of rising prices and forecast of a more challenging international environment.
Citi, in turn, raised the expectation of a rise in the IPCA this year to 7.8%, with the perception of persistent deterioration of the inflationary scenario and bets on an increase in basic interest rates to 13.25% until June.
Analysts consulted by the Central Bank’s latest Focus bulletin, on the other hand, expect inflation to remain at 7.89% in 2022 – compared to a previous forecast, of a high of 7.65%.
If the estimates are confirmed, this year will be the second consecutive year in which the inflation target is not met. In 2021, the IPCA rose 10.06%. In addition, if the target is exceeded in 2022, this year’s inflation could also contaminate next year’s.
To prevent this from happening, the Central Bank has repeatedly increased the basic interest rate. At the last Copom (Monetary Policies Committee) meeting, the Selic rate was raised again by 1 percentage point, from 11.75% to 12.75% per year, the highest level since 2017.
In addition, the expectation that the economy should slow down has increased. The Copom assesses that the tightening of financial conditions creates a risk of a slowdown in economic growth, stronger than anticipated in the coming quarters.
“In the most volatile items, the increase in the price of gasoline continues to be highlighted, with a greater and faster impact than was expected”, said the committee, through its minutes.
The BC also points out that the prices of services and industrial goods remain high and that recent shocks linked to the conflict in Eastern Europe and the Chinese policy to combat Covid-19 have led to a sharp increase in components related to food and fuel. .
The rise in prices that is felt every day by Brazilians is a topic dear to the government of Jair Bolsonaro (PL), who is expected to seek re-election in October.
The president’s fear is that the impact of going to the supermarket and gas station will weigh on the voter’s choice, and the government has attributed the price hikes to external factors – such as the distancing measures in the pandemic, the Ukraine War itself and the fuel increases made by Petrobras.
According to a Datafolha poll published at the end of March, however, 75% of Brazilians blamed the Bolsonaro government for the rise in inflation.
Through profiles on social networks, such as Tik Tok and Twitter, users have also blamed the government for the high price – a term that has returned to the vocabulary of Brazilians in recent months.
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