Brazil’s Inflation Decreases in October Thanks to Food Prices

By Lise Alves, Senior Contributing Reporter

SÃO PAULO, BRAZIL – Brazil’s inflation in the first half of October registered the lowest growth rate since the first fifteen days of October of 2009. The IPCA-15 inflation index, which measures inflation from the fifteenth of one month to the fifteenth of the following month registered a hike of 0.19 percent in October, according to the IBGE (Brazil’s Statistics Institute).

“The decrease in the inflation rate between September and October was caused mainly by a deflation of food prices by 0.25 percent,” read the statement released by IBGE analysts. According to the Bureau, this group of expenditure registered a deflation of only 0.01 percent in September.

The declining rise of food prices was one of the main factors for Brazilian Central Bank’s Monetary Policy Committee (Copom) to decrease its benchmark interest rate (Selic) earlier this week for the first time in four years. Significant decreases in prices were seen in items such as potatoes (-13.03 percent), milk (-8.49 percent), and vegetables (-6.18 percent).

The decline could have been even greater if not for the increase in prices of food items such as meat, whose prices rose by 2.45 percent from mid-September to mid-October.

Another item which also limited the decrease of inflation in the index was ethanol prices, which increased by 3.38 percent and influenced not only ethanol-fuel run vehicles but those which run on gasoline, since Brazilian gasoline contains 27 percent of ethanol in its composition.

The IPCA-15 index now accumulates an increase of 6.11 percent this year, well below the 8.49 percent recorded in the same period in 2015.