The inflation in Brazil was 0.23% in August, an acceleration qthat raises the advance in prices in 12 months to 4.61%, reported this Tuesday the Brazilian Institute of Geography and Statistics (IBGE).
The rebound in the Broad Consumer Price Index (IPCA) in August is the second consecutive after July (0.12%), when the 12-month measurement had registered the first increase in a year, standing at 3.99%.
Prices in South America’s largest economy were impacted in August by increases in housing sectors (1.11%, mainly due to increase in bills of light), health and personal care (0.58%) and transportation (0.34%), impacted mainly by increases in gasoline. On the other hand, the category Alimentation and drinks fell 0.85%.
“We have observed falls in recent months in some important products in family consumption, such as beef and chicken,” said André Almeida, manager of the IPCA at the IBGE, who attributes this reduction to greater supply.
Brazil: the Central Bank in the crosshairs over rates
Due to an improvement in inflation After the impact of the pandemic and the war in Ukraine, the Central Bank of Brazil In August, a cycle of “flexibility” of the high reference interest rate (Selic) began, with a cut of 0.50 percentage points, to 13.25%, the first decrease in three years.
“The (inflation) numbers were good and maintain the Selic’s forecast of additional cuts,” economist André Perfeito said in a statement, who estimates a reference rate of 11.75% at the end of 2023.
The consultant Capital Economics considers that the Central Bank will maintain its rate flexibility despite the rise in inflation, although he estimates that it will be a “more gradual” reduction cycle.
The government of Luiz Inácio Lula da Silva has insisted since he took office in January on a rate cut that makes credit cheaper, to encourage consumption and investment.
The Brazilian market projects that the country will end 2023 with an inflation of 4.93%, according to the latest Focus market survey, released by the Central Bank.