IPCA: inflation stays at 1.06% in April and reaches 12.13% in 12 months | Economy

Driven by the rise in fuel prices, the Broad Consumer Price Index (IPCA), considered the country’s official inflation, stood at 1.06% in April, after a rise of 1.62% in March, as announced this Wednesday (11) by the Brazilian Institute of Geography and Statistics (IBGE).

It was the biggest change for a month of April since 1996 (1.26%). That is, in 26 years.

In 2022, the IPCA accumulates a high of 4.29%.

Despite having decelerated compared to the March result, inflation jumped to 12.13% in 12 monthsabove the 11.30% observed in the immediately previous 12 months.

It is about highest inflation for the 1 year period since October 2003 (13.98%).

Inflation came a little higher than expected. The median of the 39 projections collected by Valor Data was a rate of 1% in April and 12.06% in 12 months.

With the April result, it’s already been 8 months in a row with inflation running above double digitswhich reinforces the bets of a new increase in the basic interest rate (Selic), currently at 12.75% per year.

generalized deceleration

Among the nine groups of products and services surveyed by the IBGE, only Housing registered deflation in April. Pressured by the fall in the cost of electricity in the country, this group recorded a drop of 1.14% in April, after having suffered a rise of 1.15% in March.

Another five groups registered a deceleration of inflation, that is, they maintained high prices, but at a lower intensity than that observed in the previous month. The transport group was the second with the most intense decline, changing from 3.02% in March to 1.91% in April.

On the other hand, the indicator more than doubled from March to April in the household articles groups (from 0.57% to 1.53%), health and personal care (from 0.88% to 1.77%) and communication (from -0.05% to 0.08%).

According to the IBGE, the group of household articles was mainly pressured by the 2.25% increase in household appliances and equipment. The health and personal care segment was impacted by the 6.13% rise in pharmaceutical products, while the communication segment was pressured by the average increase of 0.41% in telephone sets.

See April inflation for each of the surveyed groups

  • Food and beverages: 2.06%
  • Transport: 1.91%
  • Health and personal care: 1.77%
  • Household items: 1.53%
  • Clothing: 1.26%
  • Personal expenses: 0.48%
  • Communication: 0.08%
  • Education: 0.06%
  • Housing: -1.14%

Both transport and food and beverages gained weight from March to April. “Together, they contributed with about 80% of the April index”, highlighted the research analyst, André Almeida.

Fuels follow the villains

According to the IBGE, the rise in fuel prices was the one that most pressured inflation in April. Together, fuels rose 3.20% from March to April, representing 0.25 percentage points of the IPCA in the month.

Gasoline was once again the villain of inflation in the month, with a rise of 2.48%, accounting alone for an impact of 0.17 percentage point on the index. “Gasoline is the sub-item with the highest weight in the IPCA (6.71%), but other fuels also rose. Ethanol rose 8.44%, diesel oil, 4.74% and there was still a 0.24% rise in vehicular gas,” said researcher André Almeida.

In 12 months, fuels accumulate a high of 33.24%, gasoline of 31.22%ethanol, 42.11%, diesel, 53.5%, and vehicular gas, 45.18%.

Most Expensive Potatoes and Tomatoes

Food, which had already risen in the previous month, continued to rise in April. The rise was driven by the prices of food for consumption at home (2.59%).

Among the main increases, the highlights were the increases in long-life milk (10.31%), potato (18.28%), tomato (10.18%), soy oil (8.24%), French bread (4.52%) and meat (1.02%).

Energy softens index of the month

The housing group was the only one with deflation in the month, driven by the fall in electricity prices (-6.27%). In March, the group had registered a high of 1.15%.

“The negative variation of electric energy was the one that most contributed to this deceleration [no mês]”, pointed out Almeida.

As of April 16, the green tariff flag came into effect, with no extra charge on the electricity bill. Since September of last year, the Water Scarcity flag was in effect, which added R$14.20 to every 100 kWh consumed.

already the Bottled gas rose 3.32% in April and accumulates a high of 32.34% in 12 months.

RJ has the highest inflation

Among the 17 regions surveyed by the IBGE, seven registered higher prices than the national index. The highest inflation was observed in Rio de Janeiro (1.39%), while the smallest variation occurred in Salvador (0.67%).

Belo Horizonte and São Paulo were the only regions that registered the same inflation rate as the national average.

more widespread inflation

Even with the deceleration in the month, inflation became more widespread. THE diffusion index went from 76.13% in March to 78.25% in April. This is the most intense diffusion index since January 2003, when it stood at 85.4%.

The indicator reflects the spread of price increases among the 377 products and services surveyed by the IBGE. This means that nearly 8 out of 10 items surveyed were more expensive.

The IBGE noted that among non-food products, the diffusion index remained stable at 77.51%. Among foodstuffs, the indicator accelerated from 74.40% to 79.17%.

Airfare and app transport put pressure on services

While the country’s general inflation decelerated from March to April, the services inflation increased in the period, from 0.45% to 0.66%.

In 12 months, the services IPCA accumulates a high of 6.94%, almost half of the general inflation indicator in the country.

Among the items that make up the basket of services surveyed by the IBGE, airline tickets registered the highest price change in April (9.48%), followed by transport via apps (4.09%) and voluntary vehicle insurance (3 .31%).

Inflation for low income

The National Consumer Price Index (INPC), which calculates inflation for low-income families and is used as a reference for salary readjustments and INSS benefits, rose 1.04% in April, against 1.71% in March.

It was the biggest change for a month of April since 2003, (1.38%). In the year, the INPC accumulates a high of 4.49% and, in the last 12 months, of 12.47%.

Inflation above target for the 2nd year in a row

Inflation forces Brazilians to decide which expenses to pay and which to postpone

Average market expectations for 2022 closed inflation are currently at 7.89% – more than double the mid-year target, but still below the 10.06% recorded in 2021.

Projections for the IPCA continue to be revised upwards and the Central Bank itself has already admitted that the inflation target should exceed, for the 2nd year in a row, the government’s target ceiling, which had been set at 3.5% for 2022.

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 12.75% and the BC has signaled that it is on its way to raising interest rates further.

According to the minutes of the last Copom meeting, consumer inflation “continues to be high, with an increase spread across several components, proving to be more persistent than anticipated.”

For 2023, the current market projection is for inflation of 4.10% and interest rate at 9.25% at the end of the 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%.

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