RIO and SÃO PAULO – Pressured by the increase in electricity bill, the inflation accumulated in 12 months reached the double digit mark in four capitals of the country in the preview of August: Porto Alegre (10.37%), Goiânia (10.67%), Fortaleza (11.37%) and Curitiba ( 11.43%). The data were released by Brazilian Institute of Geography and Statistics (IBGE) this Wednesday, the 25th.
National leader in inflation, the metropolitan region of Curitiba registered an increase of 26.19% in the electricity bill from July last year to August this year, according to the IBGE. In addition to the 52% increase in the additional value of the level 2 red tariff flag, the saltier cost reflected the energy readjustment by the local concessionaire at the end of June, after authorization from Aneel.
Just behind Curitiba, the cost of living in Fortaleza has been more pressured, in addition to energy, by fuel. Gasoline purchased at a gas station in the capital of Ceará was, on average, 37.47% more expensive in the last 12 months until August, according to the IBGE. Diesel oil was 31.89% more expensive. Vehicle gas rose less, 18.55% accumulated from July 2020 to August this year.
IBGE data show that, on the national average, the IPCA-15 was 9.30% in 12 months until August, the highest rate since May 2016 (9.62%). Inflation therefore remains far from the inflation target pursued by the Central Bank (BC) this year, of 3.75%, with a tolerance of 1.5 percentage points upwards or downwards. The upper limit of the target is 5.25%.
The last time the index reached the double-digit mark by the national average was in February 2016 (10.84%), with the increase in fresh food prices.
Other locations surveyed by the IBGE also registered inflation above the national average for the last 12 months, although they did not reach the double-digit mark: Recife (9.88%) and Belém (9.85%). Belo Horizonte had a rate of 9.30%, the same as the national average. Rio de Janeiro (7.93%), Brasília (8.27%), Salvador (8.31%) and São Paulo (8.64%) were below.
Alone in the month of August, the IPCA-15 was 0.89% in August, accelerating from the previous month (0.72%). It was the highest rate for the month of August since 2002, when it advanced 1%. It was also the second highest rate for this year, just behind March (0.93%). The result was above most analysts’ estimates consulted by Broadcast Projections was 0.84% for August, with a range of 0.65% to 0.92%.
For Daniel Lima, an economist at Banco ABC Brasil, the spread of inflation in August increases the chance of a higher-than-expected increase in the basic interest rate, the Selic, at the September Copom meeting. In the bank’s calculations, 73.17% of prices surveyed by the IBGE increased in August. In July, the so-called diffusion index was 6.93%.
“Current pressures may push the projections for the IPCA for 2021 and consequently for 2022, via greater inertia, and the probability of the alternative scenario ends up increasing”, says the economist, who forecasts a 1 percentage point increase in the Selic in September, to 6.25% per year. In the alternative scenario, the Selic would be increased by 1.25 percentage points.
Marcos Mollica, manager of Opportunity Total, fund of the manager Opportunity, says that the reading of the IPCA-15 of August did not bring any relief to the inflationary scenario. For him, however, there is no lack of inflationary control, but a high level of inflation that “requires a reaction from the Selic and caution from the Central Bank”.
Mollica projects a 7.8% increase in the IPCA in 2021, but warns that the index could even exceed 8%, especially if the National Electric Energy Agency (Aneel) decides to readjust the additional value of the red flag 2 of electricity If there is an increase of R$ 15, says the manager, the impact on the IPCA would already be around 0.20 percentage points.
In August, residential electricity became 5% more expensive, exerting the greatest impact (0.23 percentage point) on the IPCA-15 among the sub-items monitored by the IBGE. The recent increase in energy reflects the 52% readjustment of the additional value of the red tariff flag level 2, valid as of July 1st.
Economist Leonardo França Costa, from ASA Investments, says that inflation measured by the IPCA should remain under pressure in the short term. For him, the prices administered by the government — energy, fuels — are the most worrying. “I still expect an improvement in the IPCA in the fourth quarter, but short-term surprises make me less confident,” said the economist.
The preview of food and beverage inflation also drew attention in August, accelerating to 1.02% in August, from 0.49% in July. The increase in food prices was expected by analysts, after the low temperatures, registered in part of the country at the end of July and beginning of August, have reached plantations. The scenario was already challenging because of the impact of the drought on the supply of fresh products.
The chief economist of Ativa Investimentos, Étore Sanchez, assesses that the preview of August inflation would not be as bad as other times. “The cores came out relatively well behaved, with an acceleration in line with expectations. In the transmission of the IPCA-15 to the closed IPCA, in those items that are equivalent, we did not have major changes, as airline tickets and education came in line”, he said.
Ativa forecasts a reduction from 0.96% in July to 0.62% in August in the closed IPCA, to be released in early September by the IBGE. The projection for the official inflation for 2021 was kept at 7%, but it may rise to up to 7.6% if there is a new readjustment by Aneel in the tariff flag this year. For 2022, the expectation is for an increase of 3.5%.
IPCA-15 accumulated in 12 months in capitals (August 2021)
- Curitiba – 11.43%
- Fortaleza – 11.37%
- Goiânia – 10.67%
- Porto Alegre – 10.37%
- Recife – 9.88%
- Belem – 9.85%
- Belo Horizonte – 9.30%
- National average – 9.30%
- São Paulo – 8.64%
- Salvador – 8.31%
- Brasília – 8.27%
- Rio de Janeiro – 7.93%