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On Tuesday (11/10) the Brazilian Institute of Geography and Statistics (IBGE) announced that Brazil registered deflation (general price drop). The data corresponds to the month of September, when prices fell 0.29%. For the experts, the biggest impact for this result was caused by the reduction in fuels prices due to governmental incentives and international factors.
Three Consecutive Drops
This is the third consecutive decline of the IPCA (Broad Consumer Price Index). The country’s official inflation indicator had dropped 0.36% in August and 0.68% in July this year. A three-month streak of deflation has not been seen since 1998.
Biggest Drop Since 1994
It is also the biggest drop for September in the historical series since the beginning of the Real Plan in 1994.
12 Month Period
In the 12-month period, the inflation index lost strength, but remains on the rise. Until September, there is a 7.17% accumulated increase in prices.
Cut in Taxes on Fuels
Pressured by the famine in the election year, President Jair Bolsonaro sanctioned in June the law that set a ceiling for charging ICMS (state tax) on fuel, energy, transport and telecommunications. One of the reflexes was the drop in gasoline prices, the sub-item that has the biggest impact on the Consumer Price Index (IPCA). In September, gasoline dropped 8.33%, according to the IBGE.
Impact For the Poorest
Despite the positive results above, the food and beverage prices in Brazil still accumulates inflation of 9.54% in first nine months of this year – January to September. It is the highest increase for this period since the beginning of the Real Plan. Analysts assess that foods tend to stay at a high price level until December and no new deflations are projected.
