The Extended National Consumer Price Index (IPCA), which calculates the country’s official inflation, was 0.53% in January this year. The variation was mainly caused by the increase in food prices, which rose 0.59% in the month. The data were disclosed this Thursday (9) by the Brazilian Institute of Geography and Statistics (IBGE).
January inflation is lower than those observed in December (0.62%) and in January 2022 (0.54%), which indicates a downward trend in the index. Even so, in 12 months, the IPCA accumulates inflation of 5.77%, about 1 percentage point above the target established by the National Monetary Council (CNM) for the end of the year.
::Understand the dispute between Lula and the Central Bank::
The CNM established, still in 2020, that inflation in Brazil would have to be 3.25% in 2023, and could reach 4.75%. The Central Bank (BC), the institution responsible for controlling price increases, raised the economy’s basic interest rate, the Selic, to try to contain the index.
President Luiz Inácio Lula da Silva (PT), in turn, has criticized the high level of Brazilian interest rates because they inhibit the growth of the country’s economy. Today, the country has the highest real interest rate in the world (Selic minus inflation).
::Forecasts point to rising inflation and reinforce pressure on BC::
“Brazil needs to grow again. There is no reason for the interest rate to be at 13.75%”, complained Lula, in an interview with RedeTV!.
What weighs on inflation?
Lula has stated that the increase in interest promoted by the Central Bank is useless as the country suffers from inflation caused by prices in some specific sectors. During 2021 and 2022, the last years of former President Jair Bolsonaro’s (PL) management, the index was above the CMN target mainly due to the rise in food and fuel prices.
Only in January of this year, the potato rose 14.14%; tomato, 3.89%; fruits, 3.69%; and rice, 3.13%. Gasoline rose 0.83% in part because Petrobras’ former management readjusted the price of the product sold to distributors.
The group of transport items had a price increase of 0.55%.
Lula promised in his campaign to contain the price of food and fuel. “It is a priority task to coordinate economic policy to fight inflation and face high prices, in particular food and fuel and electricity”, he wrote, in a document sent to the Superior Electoral Court (TSE).
::Food surge is more than double inflation in 2022::
In the case of food, Lula promised to rebuild regulatory stocks and to expand financing and support for production, small farmers and organic agriculture.
In the case of fuels, he wants to “Brazilianize” Petrobras’ prices, changing the company’s pricing policy.
::Change in Petrobras prices undergoes new direction and “calibration” of new policy
Other sectors
Clothing was the only group that had a price drop in January: -0.27%.
The other expense groups recorded the following indices: communication (2.09%), personal expenses (0.76%), household items (0.70%), education (0.36%), housing (0.33 %) and health and personal care (0.16%).
*With information from Agência Brasil
Editing: Rodrigo Durão Coelho
