IPCA-15: preview of inflation accelerates to 0.89% and has the biggest increase for August since 2002 | Economy

Driven by the increase in electricity and gasoline, the Extended National Consumer Price Index 15 (IPCA-15), which is a preview of the country’s official inflation, accelerated to 0.89% in August, after registering a rate of 0.72% in July, reported this Wednesday (25) by the Brazilian Institute of Geography and Statistics (IBGE).

“This result is the highest for a month of August since 2002, when it reached 1%”, informed the IBGE.

In the year, the index accumulated an increase of 5.81% and, in 12 months, 9.30%, above the 8.59% observed in the immediately previous 12 months, being even higher than the ceiling of the target established by the government for the this year’s inflation, which is 5.25%.

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IPCA-15, preview of official inflation (monthly variation) — Photo: Economy G1

O result came worse than expected. A Reuters survey of economists estimated an increase of 0.82% for the period.

“This is the worst annual result since May 2016 and makes it clear that we will still have inflation concerns for some time,” said Necton economist André Perfeito.

With an increase of 5%, electricity had the greatest individual impact on the IPCA-15, accounting for 0.23 percentage points in the month’s index.

The increase is mainly explained by the entry into force of the red level 2 tariff flag, which started to charge R$ 9.49 for each 100 kWh consumed, after a 52% readjustment. Before, the increase was R$ 6,243. The change of banner occurs due to the water crisis, which has required the activation of thermoelectric plants, which are more expensive in terms of energy.

In addition, tariff readjustments in cities such as Belém, São Paulo, Curitiba and Porto Alegre also weighed on energy inflation.

What makes gasoline and diesel prices go up?

What makes gasoline and diesel prices go up?

Gasoline rises by 39.5% in 12 months

Fuel prices increased 2.02% in August.

The greatest pressure came from the increase in gasoline (2.05%), whose accumulated variation in the last 12 months reached 39.52%. Gasoline alone contributed 0.12 pp of the IPCA-15 in August.

The prices of ethanol (2.19%) and diesel oil (1.37%) also rose, while vehicle gas fell by 0.51%.

Together, electricity and gasoline accounted for 0.35 percentage points, or more than a third, of the month’s inflation, according to the IBGE.

You prices of cylinder gas (3.79%) and piped gas (0.73%) also rose in August.

Consumers feel in their pockets the inflation that is above the Central Bank's target

Consumers feel in their pockets the inflation that is above the Central Bank’s target

More expensive prices in 8 out of 9 surveyed groups

Among the groups, the main upward pressures in the month came from transport, with an increase of 1.11%, followed by food and beverages (1.02%). The only drop in August was in health and personal care (-0.29%).

See the IPCA-15 result for each of the groups:

  • Food and beverages: 1.02%
  • Housing: 1.97%
  • Articles of residence: 1.05%
  • Clothing: 0.94%
  • Transport: 1.11%
  • Health and personal care: -0.29%
  • Personal expenses: 0.68%
  • Education: 0.30%
  • Communication: 0.19%

IPCA-15: preview of official inflation accumulated in 12 months — Photo: Economy G1

According to the IBGE, all areas surveyed had inflation in August. The lowest result occurred in Belo Horizonte (0.40%). The biggest change was registered in Goiânia (1.34%).

Tomatoes, chicken and fruit go up

The cost of food at home rose from 0.47% in July to 1.29% in August.

Among the hikes that most contributed to acceleration, according to the IBGE, highlights were tomato (16.06%), chicken in pieces (4.48%), fruit (2.07%) and long life milk ( 2.07%). On the other hand, there was a drop in the prices of onions (-6.46%), black beans (-4.04%), rice (-2.39%) and carioca beans (-1.52%) .

In eating away from home (0.35%), the movement was inverse, influenced by the deceleration of meals (0.10%), which had registered a 0.53% increase in June.

Persistent inflation and above target

The government’s central target for inflation in 2021 is 3.75%, and the tolerance range varies from 2.25% to 5.25%. To achieve it, the Central Bank raises or lowers the economy’s basic interest rate (Selic), which is currently at 5.25% per year.

The financial market’s expectation for inflation in 2021 is 7.11%, according to the latest Focus survey by the Central Bank. As a result, analysts’ projections continue to rise above the target system’s ceiling.

Analysts’ expectations for the Selic rate at the end of the year remain at 7.5%, which presupposes new highs in the coming months. Some of the analysts are already betting on an increase greater than 1 percentage point at the September meeting of the Monetary Policy Committee (Copom) of Banco Centra.

For 2022, the financial market estimates an inflation of 3.93%. Next year, the central inflation target is 3.5% and will be officially met if it fluctuates from 2% to 5%.