Higher energy prices lead the IPCA to 1.95% in the month; index goes to 8.35% in 12 months, above the limit of 5.25%
Higher electricity prices put pressure on inflation O Extended National Consumer Price Index (IPCA) ran out of steam in June when it recorded a high of 0.53%, compared to an advance of 0.83% in May, according to figures released by the Brazilian Institute of Geography and Statistics (IBGE) this Thursday, 8. The result makes the official indicator of brazilian inflation accumulate an increase of 8.35% in 12 months, above the ceiling of 5.25% of the target pursued by the Central Bank, with a center of 3.75% and a floor of 2.25%. In the year, inflation accumulates a high of 3.77%. In June 2020, the index recorded growth of 0.26%. already the National Consumer Price Index (INPC), seen as the inflation of the poorest, advanced 0.60%, below the rate of 0.96% registered in April. The indicator, which is also used as a reference for readjustments of the minimum wage and INSS benefits, accumulates, in the year, an increase of 3.95%, and of 9.22% in 12 months.
The 1.95% increase in electricity was the biggest single impact of the month. The sector had already led the May IPCA by registering a high of 5.37%. A National Electric Energy Agency (Aneel) imposed the red flag level 2 from June. The change added R$ 6.243 for every 100 kilowatt hour (kWh) consumed. At the end of last month, the institution approved an increase of 52% in the extra fee on the electricity bill starting this month, with the increase in the red flag level 2 rate to R$ 9.49 per 100 kWh. The new level should continue until the end of the year amid the country's worst water crisis in 91 years. “Energy continued to rise a lot due to the red flag tariff level 2, which came into effect in June. In May, the red flag level 1 was in force, whose increase is smaller (R$ 4.169). Prices, however, decelerated in June due to the various readjustments captured in May in the surveyed areas. In June, we only had an average readjustment of 8.97%, in Curitiba, at the end of the month”, explains the research analyst, André Filipe Guedes Almeida. The group of foodstuffs and beverages also put pressure on inflation. Food at home increased from 0.23% in May to 0.33% in June, mainly due to the rise in meat prices (1.32%), which rose for the fifth consecutive month. Next comes the transport group, driven by fuel. Gasoline recorded an increase of 0.69%, against an advance of 2.87% in May. Petrobras readjusted the prices of gasoline and diesel charged at the refinery at once.
O central bank already abandoned the expectation of closing 2021 below the target ceiling. The estimate published in the second quarter inflation report points to an increase of 5.8% due to the rise in prices of commodities and recent electricity pressure. According to the president of the monetary authority, Roberto Campos Neto, inflation spread throughout the economic chain, but the pressures are still temporary. The BC's forecast is below that estimated by the financial market. data of Focus Bulletin released this week show the revision of the expectation to 6.07%, the 13th upward change of the IPCA. The advance of inflation should push for a more incisive increase in the Selic. The basic interest rate was raised to 4.25% in June by receiving another 0.75 percentage points. O Monetary Policy Committee (Copom) stated that he should apply a dose of the same proportion at the August meeting, but did not rule out a higher increase, estimated by analysts at 1 percentage point. The market estimates that the Selic will end the year at 6.5%, a value considered neutral, that is, it neither stimulates nor harms economic activity.