In 2023, Brazil recorded the seventh highest inflation among G20 countries, reports Alex Agostini, Austin Rating’s chief economist.
The country ended the year with a 4.62% annual rate, its lowest since 2020. This marked the first time in three years Brazil met its inflation target.
Argentina led the G20 in inflation, ending 2023 with a 211.4% rate. This was a sharp rise from 94.8% in 2022.
Among 21 countries and regions studied, 19, including Brazil, saw inflation slow down. Only Argentina, Turkey, and India had inflation rates as high or higher than in 2022.
In the broader Latin American context, Argentina overtook Venezuela. Venezuela’s annual rate was 173.6%, while Brazil was sixth in the region.
Key points about Brazil’s inflation:
- Gasoline prices increased by 12.09% in 2023, heavily influencing overall inflation.
- Brazil’s Consumer Price Index (IPCA) for 2023 was below 2022’s 5.79%.
- The Transportation sector grew by 7.14%, while Food and Beverages rose modestly by 1.03%.
- Home food prices fell by 0.52% in 2023, helping to lower the annual rate.
- The annual rate exceeded 4.75% in January, February, September, and October.
Financial forecasts predict a 3.9% inflation rate in 2024 and 3.5% in 2025.
Monetary Policy
The Central Bank of Brazil (BC) and its president, Roberto Campos Neto, faced criticism from President Luiz Inácio Lula da Silva.
They were challenged for their handling of the monetary policy. Criticism focused on the high Selic rate, 13.75% annually until August, when cuts began.
The Selic rate is a tool to reduce inflation. In July 2023, Lula stated that Campos Neto needed to remember the Central Bank’s non-political role.
Campos Neto replied by emphasizing the Bank’s technical approach. He noted major Selic rate adjustments in 2021 and 2022, which helped lower inflation in 2023.
By year’s end, a more collaborative tone emerged. Lula invited Campos Neto to a barbecue in Brasília, a gesture he accepted.