Inflation closes 2017 at 2.95% and stands below target floor
January 10, 2018 09h00 AM | Last Updated: January 10, 2018 12h12 PM
Having changed 0.44% between November and December, the highest rise in the year, the Extended National Consumer Price Index - IPCA stayed at 2.95% in 2017. This was the lowest index since 1998, when the IPCA registered 1.65%, and it was 3.34 percentage points (p.p.) below the rate of 6.29% in 2016. This figure stood below the 4.5% inflation target, established by the National Monetary Council for Brazil, with a tolerance interval of 1.5 p.p. above and below it.
Of the nine groups that comprise the index, Food and Beverages – about 25% of the expenses of households – was the one that mostly contributed to hold down the IPCA, as it accrued a drop of 1.87% in the year. The result was due, to a great extent, to the 4.85% drop in the price of food consumed at home, highlighted by fruits (-16.52%), which exerted the biggest negative impact (-0.19 p.p.) on the overall index in 2017.
According to Fernando Gonçalves, manager of the National System of Consumer Price Indexes, food deflation was a consequence of the agricultural production, whose harvest was nearly 30% bigger than that in 2016, as shown by the November estimates of the Systematic Survey of Agricultural Production, a survey also carried out by the IBGE: "This situation took consumers to pay cheaper (-1.87%) than in the previous year. This is the first time that this group shows a deflation since the implementation of the Real Plan", says Gonçalves.
Three groups are main responsible for year inflation
If food contributed to reduce the inflation in 2017, Housing (6.26%), Health and Personal Care (6.52%) and Transportation (4.10%) were the groups that mostly positively influenced the index in 2017 (2.45 p.p. in 2.95%).
In Housing, the major influence came from products like bottled gas (16%), water and sewage fees (10.52%) and electricity (10.35%). According to Gonçalves, this situation can be partly explained by the adjustment of 84.31% in the refineries, which contributed to the increase of the gas prices sold in 13-kg cylinders.
The change in the prices of Health and Personal Care was influenced by the increase in the monthly tuitions, which became 13.53% more expensive, and medicines, which became 4.44% more expensive. This result was due to the adjustment of up to 13.55%, granted by the National Regulatory Agency for Private Health Insurance and Plans - ANS, and of up to 4.76% by the Drug Market Regulation Chamber - Cmed.
Having risen 10.32%, gasoline was the product that mostly rose in Transportation. Besides the adjustment in taxes (PIS/COFINS), 115 price adjustments have been granted, causing a cumulative rise of 25.49% between July 3 and December 28, 2017. According to the manager of the National System of Consumer Price Indexes, "this change aims at following the exchange rate and the foreign prices of oil and derivatives".
Text: Pedro Renaux
Design: Pedro Vidal
Image: Pexels
