Understand how high inflation impacts the Brazilian economy and what are the expectations for the coming months.
Estimated reading time: 3 minutes
The purchasing power of Brazilians has been increasingly reduced with the escalation of inflation. Common elements of everyday life, such as cooking gas, food, gasoline and electricity, show a large rise in prices, directly impacted by high inflation.
According to the Broad Consumer Price Index (IPCA) – the official measure of inflation –, the rate captured in April 2022 was 1.06%, the highest level for that month since 1996.
Rise in the value of the basic food basket due to inflation
The basic food baskets, which are essential in everyday life, increased by 5.11% in the first months of this year, according to a survey by ABRAS (Brazilian Association of Supermarkets). This increase results from the transfer of food production costs, especially with the high prices of diesel, which fall on the freight of the logistics of the products.
To make the example clearer, coffee, present in the mornings of Brazilians, has accumulated, in the last 12 months, a high of 67.53%.
Public transport also suffers from rising inflation. Considering that many people depend on these means of transportation on a daily basis, the impact is direct. Bus fares increased by 4.46% in 1 year. The subway, on the other hand, underwent a readjustment of 3.64% in the month of April alone.
How is the IPCA calculated?
The IPCA (Broad Consumer Price Index) has been calculated by the IBGE (Brazilian Institute of Geography and Statistics) since 1980. Its objective is to show price changes for different products and services each month.
377 items are analyzed, according to the POF (Family Budget Survey), which records what families consume. The items examined are divided into nine groups: housing, food and beverage, clothing, transportation, household items, health, expenses, communication and education.
For the survey, the IPCA checks prices in 10 metropolitan regions of the country. The determination of the general index is carried out from a weighted average of prices, considering the monthly variations.
What are the expectations for inflation?
According to economists, inflation should reach more than double the value defined by the Copom (Monetary Policy Committee), reaching close to 8%. A reduction in the second half of this year is likely, however, it will not represent a decrease or stabilization, as prices will only increase to a lesser extent.
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