Inflation calculated by the Extended National Consumer Price Index (IPCA), considered the country’s official inflation, was 0.87% in August, according to data released on Thursday (9) by the Brazilian Institute of Geography and Statistics (IBGE ). It is the highest rate for a month of August since 2000, although slightly below the 0.96% registered in July.
Fuels were the ‘villain’ of inflation in the month. According to the IBGE, the increase was 2.96%, above the 1.24% of the previous month. Gasoline alone, up 2.80%, was responsible for 0.17 percentage point of monthly inflation, the biggest impact on the index. Ethanol (4.50%), vehicle gas (2.06%) and diesel oil (1.79%) were also more expensive in the month.
“The price of gasoline is influenced by adjustments applied at refineries in accordance with Petrobras’ pricing policy,” said research analyst André Filipe Guedes Almeida in a note.
“The dollar, prices on the international market and the rise of biofuels are factors that influence costs, which ends up being passed on to the final consumer. In the year, gasoline accumulates an increase of 31.09%, ethanol 40.75% and diesel 28.02%”, concluded .
Inflation in August 2021 was the highest for the month since 2000 — Photo: Economy/G1
As a result, inflation accumulated in 12 months reached 9.68%, the highest since February 2016, when it was 10.36%. In the year, the IPCA accumulates high of 5.67%.
Since March, the indicator accumulated in 12 months has been increasingly above the ceiling of the target set by the government for this year’s inflation, which is 5.25%.
See the result for each of the groups surveyed:
Of the 9 groups of products and services surveyed, 8 increased in July:
- Food and beverages: 1.39%
- Housing: 0.68%
- Articles of residence: 0.99%
- Clothing: 1.02%
- Transport: 1.46%
- Personal expenses: 0.64%
- Education: 0.28%
- Communication: 0.23%
- Health and personal care: -0.04%
Weight of transport and cheaper air tickets
Driven by fuel, transportation increased 1.46% in August, exerting the greatest influence on the IPCA among the groups.
Here, there was also an increase in own vehicles (1.16%), with an increase of 1.98% in used cars, 1.79% in new ones, and 1.01% in motorcycles. Public transport, on the other hand, had an average drop of 1.21%, under the influence of a 10.69% drop in airline ticket prices.
Food prices did not give consumers a break in August: rising 1.39% (more than double the 0.60% rise registered in July), they had the second largest weight on the IPCA in August.
See the main highs among the items:
- English potato: 19.91%
- ground coffee: 7.51%
- chicken pieces: 4.47¨
- fruits: 3.90%
- meat: 0.63%
High electricity bill loses strength, but still pressures
A villain of last month’s inflation, the rise in energy lost steam in August, rising 1.10% (in July, it was 7.88%) – but continued to put pressure on the bills.
“The result is a consequence of the tariff readjustments in Vitória, Belém and in one of the concessionaires in São Paulo. In addition, the level 2 red tariff flag, which adds R$ 9,492 for every 100 kWh consumed, was in force in the months of July and August”, stated André Filipe Almeida.
The prices of piped gas (2.70%) and cylinder gas (2.40%) also rose.
The survey also shows that all areas surveyed had inflation in August.
The highest rate was registered in Brasília, of 1.40%, influenced by increases in the prices of gasoline (7.76%) and electricity (3.67%). The lowest was in the metropolitan region of Belo Horizonte (0.43%), due to the drop in the prices of airline tickets (-20.05%) and the water and sewage rate (-13.73%).
Inflation target and outlook
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 reduces the basic interest rate of the economy (Selic), which was raised in early August to 5.25% per year.
Financial market estimates are already far from BC’s targets: in the latest Focus survey, which gathers analysts’ projections, the expected inflation for this year already reached 7.58%.
Analysts’ expectations for the Selic rate at the end of the year are currently at 7.63%, which assumes that there will be new increases in the coming months.
In the minutes of its last meeting, the Central Bank’s Monetary Policy Committee assessed that consumer inflation continues to be “persistent”, indicating a new increase of one percentage point in the basic interest rate of the economy at its next meeting, scheduled for 21 and September 22.
For 2022, inflation also shows signs of being out of line: the financial market estimates a rate of 3.94%. Next year, the central inflation target is 3.5% and will be officially met if it fluctuates from 2% to 5%.