Brazil Inflation Index May Stay in Single Digits for 2015

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – The IPCA (Consumer Price Index) in Brazil rose by 0.54 percent in September, according to the IBGE (Brazilian Statistics Bureau) more than double the inflation rate seen in the month of August (0.22 percent). The inflation rate now accumulates an increase of 7.64 percent for the first nine months of the year, the highest for the period since 2003. The Bureau, however, announced their prediction of registering only single-digit numbers for inflation for the year of 2015.

“The increase in September suffered strong influence from the increase in air travel, due to the Rock in Rio (music festival) and pressure from a fifteen percent increase in gas for cooking, in addition to (increase) in water and sewage service prices in some regions,” stated Eulina Nunes dos Santos, coordinator of the price index at the IBGE while announcing September results.

IBGE officials expect October’s inflation rate to also be high influenced by the recent six percent increase in gasoline, twelve percent increase in ethanol and four percent increase in diesel fuel prices.

Bureau analysts, say, however, that inflation for the last three months of the year may not be as high was what was registered last year (October 0.42 percent, November 0.51 percent, December 0.78 percent) thus leading the 2015 IPCA final results to be lower than ten percent.

“I believe that despite the increases, including of the U.S. dollar, we see (lower) demand as a limit to the increase,” said Nunes adding, “We therefore should see a rate below the two-digit number, since demand will regulate the increase.”

According to the latest IPCA index, Housing was the item which increased the most during September by 1.30 percent, while the lowest increase was seen in Communication, which only rose by 0.01 percent.

In regards to inflation rates in Brazil’s largest metropolitan areas, Brasília registered the greatest increase in the rate, of +1.25 percent, while the metropolitan area of Campo Grande in Mato Grosso do Sul state registered the lowest, a deflation of 0.28 percent.