2023-08-11 17:55:25
It had a subtle increase in July, interrupting a cycle of twelve consecutive months of decline.
12-month inflation in Brazil had a slight increase in July and reached 3.99%, interrupting a cycle of twelve consecutive months of declineas reported this Friday by the Brazilian statistical institute, IBGE.
Prices in the largest South American economy grew 0.12% in July, according to IBGE’s Broad Consumer Price Index (IPCA).
The data shows a rebound in the accumulated annual inflation, after in June, with a deflation of 0.08%, Brazil reached 3.16% in 12 months, the lowest data since September 2020.
rate cut
The IPCA is a relevant indicator for the inflation goals adopted by the Brazilian Central Bank (BCB), which last Wednesday began a cycle of “easing” of the interest rate reference, with a cut of 0.50 percentage pointsto 13.25%, the first decrease in three years.
Five of the nine groups of products and services evaluated by the IBGE had increases in July, with the greatest impact in the transport sectorwith a rise of 1.50%, pushed by rise in fuel (4,75%).
In the food and beverage sector, on the other hand, prices fell again 0.46%, after a fall of 0.66% in June, impacted by declines in the prices of beans, soybean oil and meat.
In July of last year, the data had been negative 0.68%, amid measures by former President Jair Bolsonaro (2019-2022) to cut fuel prices.
Faced with a panorama of relative control of inflation, the Brazilian president, Luiz Inácio Lula da Silva, has pressured the Central Bank to reduce the reference interest rate, still among the highest in the world in real terms -discounted inflation-.
The Brazilian government has repeatedly insisted since it took office in January on a rate cut that makes credit cheaper, to encourage consumption and investment. Photo: Mauro Pimentel / AFP
The Brazilian government has repeatedly insisted since it took office in January on a rate cut that makes credit cheaper, to encourage consumption and investment.
The data for July was “slightly” higher than expected by the market, around 0.07%, Gustavo Sung, chief economist at Suno Research consulting firm, said in a note.
However, Sung said the data “corroborates a more benign scenario for Brazilian inflation“.
After a year without variations, the BCB Monetary Policy Committee (Copom) evaluated last week that “the improvement in the inflationary picture” generated the “necessary confidence to start a gradual cycle of monetary easing.”
The Brazilian market projects that the country ends 2023 with an inflation rate of 4.84%according to the Central Bank Focus survey released last Friday.
The scenario maintains the “expectation of half-point cuts” in the interest rate of reference in the three remaining Copom meetings for 2023, taking the Selic to 11.75% by the end of this year, added the Suno economist.
Agencies
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