Brazil’s rate of inflation in August, as measured by the Broad Consumer Price Index (IPCA), dropped to 0.17%, compared with 0.25% in July. With this result, the index, which is used by the government to set its inflation targets, has risen 3.59% overall this year.
The target established for this year by the Central Bank is 5.1%. The data were announced today by the Brazilian Institute of Geography and Statistics (IBGE).
Fixed telephone service fees, which were responsible for over half of July’s rate, in consequence of the annual readjustment, were one of the chief items contributing to August’s reduction in IPCA growth.
The upward movement in these fees was down from 4.21% to 1.15%. Fuel price increases were also lower: Alcohol prices, which have been rising, influenced by sugar cane prices, went from 2.05% in July to 1.58% in August, while gasoline prices went from 0.87% to 0.34%.
The food and beverage group presented a real decline for the third straight month (-0.67% in June, -0.77% in July, and -0.73% in August). The prices that fell the most were those of potatoes (-15.99%), onions (-11.13%), and tomatoes (-8.37%).
Among the items for which prices rose between July and August, the leaders were domestic workers and airline fares. According to the communication issued by the IBGE, domestic workers’ salaries rose 1.86% in August, following an increase of 0.90% in July.
“Taking into account the method used in the calculations, these results reflect the readjustment in the minimum wage in May.”
The increase in airline fares (from 2.84% in July to 4.80% in August), on the other hand, is attributed to costs. Increases also occurred in the fees paid for water and sewage services and bus fares (municipal and inter-municipal).
The highest inflation was registered in Belém (1.83%). Porto Alegre was the only area that experienced deflation (-0.05%).
The IPCA gauges inflation based on the expenditures of families with monthly incomes of between US$ 128.75 (300 reais, the present Brazilian minimum wage) and US$ 5,150.00 (R$ 12 thousand) in the country’s nine largest metropolitan areas (Belém, Curitiba, Belo Horizonte, Salvador, Fortaleza, Rio de Janeiro, Recife, São Paulo, and Porto Alegre), together with Brasília and the municipality of Goiânia.
The index serves to correct companies’ quarterly and biannual balance sheets and financial reports. The data are gathered between the first and the last day of the reference month, and the results are released on around the 15th of the following month.