Brazil’s July consumer price inflation nears 20-year high, rises to 8.99 percent in last 12 months

RIO DE JANEIRO, BRAZIL – According to the Brazilian Institute of Geography and Statistics (IBGE), the Nationwide Consumer Price Index (IPCA) rose 0.96 percent in July, following a 0.53 percent increase the previous month. This was the highest result for July since 2002 when the increase was 1.19%.

For the 12-month period that ended in July, the cumulative rate was 8.99%, up from 8.35% in June, well above the official target for this year – an inflation rate of 3.75%, with a margin of 1.5 percentage points up or down. This figure is also the highest since the May 2016 figure of 9.32%.

“July was strongly influenced by energy, fuel, and food. It was high with multiple causes,” explained analyst André Filipe Guedes of Almeida Guedes.

“The increase in fuel and energy costs has weighed heavily on a budget of families in recent months, added to the increase in meat prices by more than 34%. These are the main reasons for the 12-month inflation path,” he added.

The results were in line with expectations in a Reuters poll of 0.94 percent month-on-month and 8.98 percent annualized.

The highlight in July was electrical energy, which rose from 1.95% in June to 7.88% in July. This results from tariff adjustments of 11.38% in São Paulo, 8.97% in Curitiba (11.34%), and 9.08% in one of the concessionaires in Porto Alegre (8.02%).

“In addition to the adjustments in tariff prices in some areas covered by the index, we had an adjustment of 52% of the additional value of the red tariff flag of level 2 throughout the country,” said Almeida

Thus, among the product and service groups studied, the highest increase in July was in housing, with 3.10%, compared to 1.10% in the previous month.