Inflation accelerates in Brazil and reaches 4,61% in 12 months

The increase in the Broad Consumer Price Index (IPCA) in August is the second in a row after July (0,12%), when the accumulated measurement over 12 months registered the first increase in a year, standing at 3,99%.

Prices in the largest South American economy were impacted in August by increases in the housing (1,11%, mainly due to the increase in electricity bills), health and personal care (0,58%) and transport (0,58%) sectors. %), mainly affected by increases in gasoline. The food and beverage category fell 0,85%.

“We have observed declines over the last few months in some important items in household consumption, such as beef and chicken,” stated André Almeida, IPCA manager at IBGE, who attributes this reduction to greater supply.

Due to an improvement in inflation after the impact of the pandemic and the war in Ukraine, the Central Bank of Brazil began in August a cycle of “flexibilization” of the high basic interest rate (Selic), with a cut of 0,50 percentage points to 13,25%, the first drop in three years.

The consultancy Capital Economics considers that the Central Bank will maintain flexibility despite the acceleration of inflation, although it estimates that the cycle will be more gradual.

Luiz Inácio Lula da Silva's government insists on a reduction in interest rates to make credit cheaper and encourage consumption and investment.

The market projects that the country will end 2023 with inflation of 4,93%, according to the latest Focus survey, released by the Central Bank.

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