IPCA-15: inflation preview accelerates to 0.69% in June and remains above 12% in 12 months | Economy

The National Consumer Price Index 15 (IPCA-15) – considered the preview of the country’s official inflation – stood at 0.69% in June, above the rate of 0.59% recorded in May, as announced this Friday (24) by the Brazilian Institute of Geography and Statistics (IBGE).

“In the year, the IPCA-15 accumulates a high of 5.65% and, in 12 months, of 12.04%, below the 12.20% registered in the 12 immediately previous months”, informed the IBGE.

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According to the IBGE, the The item that weighed most on the monthly rate was health insurancewhich rose 2.99% and represented 0.10 percentage point of the June IPCA-15.

The result came a little higher than expected. The median of estimates from 35 consultancies and financial institutions consulted by Valor Data was up 0.65%.

With the result of June, it has been 10 consecutive months with annual inflation running above double digits. Even having decelerated in the 12-month period, the index still represents more than twice the ceiling of the official inflation target this year, which is 3.5%, with a margin of 1.5 percentage points more or less.

The IPCA-E, which is the IPCA-15 accumulated in the quarter, was 3.04%.

See the June rate for each of the product and service groups:

  • Food and drinks: 0.25%
  • Housing: 0.66%
  • Household items: 0.94%
  • Clothing: 177%
  • Transport: 0.84%
  • Health and personal care: 1.27%
  • Personal expenses: 0.54%
  • Education: 0.07%
  • Communication: 0.36%

All groups of products and services surveyed showed a rise in June. The biggest impact came from the Transport group, which rose 0.84%, a slowdown in relation to May (1.80%). The group accounted for 0.19 pp in the general index. The largest variation was in the Clothing group (1.77% and 0.08 pp).

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The deceleration in the rate of the Transport group was due to the 0.55% drop in fuel prices, which had risen 2.05% in May. “Although there was an increase in diesel oil (2.83%), ethanol and gasoline fell by 4.41% and 0.27%, respectively”, highlighted the IBGE.

A new adjustment in the prices of gasoline and diesel sold to refineries was applied by Petrobras on June 18th. However, the pass-through of this increase to the consumer should only be reflected in the next price calculation by the IBGE.

The second biggest impact on the month’s rate came from the Health and personal care group, with a rise of 1.27%, accounting for 0.16 pp of the June index. This increase was driven by health plans, in view of the readjustment of up to 15.50% authorized by the National Supplementary Health Agency (ANS) on May 26. In addition, there was also an impact from the 1.38% rise in pharmaceutical products, with an impact of 0.05 pp on the monthly index.

Another highlight of the month is the Housing group, whose index rose again 0.66% after being the only group with a fall in May (-3.85%). According to the IBGE, the increase in Junei was driven by the readjustment of water and sewage rates in Belém, São Paulo and Curitiba, in addition to the increase in piped gas in Rio de Janeiro and Curitiba.

Electricity, which had been the villain of inflation in the country, registered a drop of 0.68% and helped to contain the rise in the Housing index. Since April, the green flag has been in effect in the country, in which there is no additional charge on the electricity bill, and the change is still reflected in the indicator.

“The Housing group, by the way, is the only one with a fall in the quarter (-1.54%), pulled by the result of May (-3.85%) influenced by the electric energy item”, highlighted the IBGE.

The Food and Beverages group, which had risen 1.52% in May, slowed to 0.25% in June, driven by food at home, which dropped from 1.71% to 0.08% in the same period. The biggest impact on this slowdown came from long-life milk, which had a deflation of 3.45% in June after rising 7.99% in May.

There was also a significant drop in the prices of carrots (-27.52%), tomatoes (-12.76%), potatoes (-8.75%), vegetables (-5.44%) and fruits (-2.61%).

Food outside the home also decelerated from May to June, but with a lower intensity, from 1.02% to 0.74%. According to the IBGE, this result was mainly influenced by the snack item, which decelerated from 1.89% in May to 1.10% in June, while the rise in meal prices went from 0.52% to 0.70% in the same period.

The IPCA-15 differs from the IPCA, the country’s official inflation, only in the collection period and geographic scope. For the calculation of the June index, prices were collected from May 14 to June 13, 2022 and compared with those in force from April 14 to May 13, 2022.

The IPCA-15 refers to families with incomes from 1 to 40 minimum wages, whatever the source, residing in the metropolitan regions of Belém, Fortaleza, Recife, Salvador, Belo Horizonte, Rio de Janeiro, São Paulo, Curitiba, Porto Alegre, in addition to the Federal District and the municipality of Goiânia.

Inflation above target for the 2nd year in a row

In 2021, inflation closed the year at 10.06%, well above the target ceiling (5.25%), representing the biggest increase since 2015.

Defined by the National Monetary Council (CMN), the inflation target for 2022 is 3.5% and will be considered formally fulfilled if it fluctuates between 2% and 5%. The Central Bank itself has already admitted, however, that the inflation target should exceed the target ceiling for the 2nd year in a row. THE The Central Bank’s projection is that the IPCA will remain at 8.8% this year.

For next year, the inflation target was set at 3.25%, and it will be considered formally met if it fluctuates between 1.75% and 4.75%. The president of the Central Bank, Roberto Campos Neto, said this Thursday (23) that inflation in 2023 should be above the center of the target, but that the institution will act to try to keep it below 4%, which was called by him from “around” the goal.

To try to bring inflation back to the target, the Central Bank has tightened monetary policy further. The basic interest rate (Selic) is currently at 13.25%.

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According to the BC president, it is still too early to talk about a drop in interest rates and that the Central Bank’s strategy is to keep the rate at high levels so that inflation converges to around the target in 2023 – the so-called “relevant horizon”.

Inflation affects everyone’s budget differently.