Inflation decelerates to 0.21%, the lowest for January since the beginning of Real Plan

Section: Economic Statistics | Alerrandre Barros

February 07, 2020 09h00 AM | Last Updated: February 07, 2020 03h12 PM

#PraCegoVer A foto mostra à esquerda um balcão de supermercado com salcichas, o resto da imagem mostra corredores do supermercado
Meat prices deflated 4.03%, exerting the biggest negative impact on the January´s IPCA - Photo: Eduardo Peret/IBGE News Agency

The IBGE announced today (7) that the official inflation, measured by the Extended National Consumer Price Index - IPCA, decelerated to 0.21% in January, after registering a rise of 1.15% in December. This was the lowest result for January since the beginning of the Real Plan, in July 1994. The indicator recorded 4.19% in the cumulative index over the last 12 months. In January 2019, the rate had been 0.32%.

The price change last month was calculated based on the new basket of products and services, which was updated from the Consumer Expenditure Survey - POF 2017-2018, in order to follow up the changes in the consumption habits of the Brazilian population. The January´s IPCA also includes prices of transportation through apps, collected for the first time by a virtual robot.

According to Pedro Kislanov, manager of the IBGE´s Price Indexes, the retreat in the meat price pressed the indicator downward. "The deceleration in the group of food and beverages (from 3.38% in December to 0.39% in January) was mainly due to the behavior of the meat prices. After rising 18.06% in the previous month, meat represented a drop of 4.03% in the January´s IPCA, contributing to the biggest negative impact on the month´s index (-0.11 p.p.).

"We had an expressive rise in the meat price in the last months of the previous year, due to the exports to China and the rise of the dollar that restricted the supply in the domestic market. Now we perceive a natural decline in the prices, inasmuch as the production has been resuming to meet the domestic market", assessed him.

Another negative contribution came from health and personal care (-0.32%), mainly due to skin care products (-6.51%) and toiletries (-4.66%). On the side of the rises, the highlights were health plan (0.60%) and pharmaceuticals (0.33%). The other groups stayed between the drop of 0.48% in wearing apparel and the rise of 0.35% in personal expenses.

The major positive impact on the index came from the group of housing, which also registered the highest change (0.55%) among the nine groups of products and services surveyed, leveraged by the prices of condominium fees (1.39%) and residential rent (0.61%).

The result of transportation (0.32%), which received a bigger weight in the new basket, was leveraged by gasoline (0.89%) and ethanol (2.59%). The prices of urban buses changed 0.78% due to adjustments in the fare in a number of regions. The major negative impact (-0.05 p.p.) came from airfare (-6.75%), which had risen 15.62% in the December´s index.

The other groups stood between the drop of 0.48% in wearing apparel and the rise of 0.35% in personal expenses.

Kislanov states that no new items impacted the January´s indicator, though he mentions some changes: transportation through apps, whose prices were collected by the robot created by the IBGE, retreated 0.54%, with the biggest drop in São Paulo (-2.89%) and the biggest rise in Goiânia (1.99%). Streaming services did not change. Hygiene of domestic animals retreated 0.19%, hairdresser and barber advanced 0.20% and eyebrow treatment declined 0.26%.

Three regions registered a deflation

Among the 16 regions surveyed by the IBGE, three of them recorded a deflation: Rio Branco (-0.21%), São Luís (-0.19%) and Brasília (-0.12%). In the capital of Acre, the retreat was due to the drop in electricity (-4.77%)

The metropolitan area of Belém and the municipality of Aracaju posted the highest inflation (0.39%) among the areas surveyed. In the former case, the index was influenced by the rise in the acai prices (13.44%) and meals (3.24%). In the latter, the biggest impacts came from gasoline (1.55%) and tomatoes (20.16%).

The indicator stayed at 0.05% in the metropolitan area of Rio de Janeiro and it was not impacted by the increasing prices of mineral water, which caused a rush to the supermarkets in January, due to the problems of water supply. "The IBGE computes the change in mineral water together with soft drinks. In January, this sub-item stayed at 2.05%, above the rate of -1.32% of December", remarked the manager of Price Indexes.

INPC registers lowest change for January since 1994

The IBGE also released today (7) the National Consumer Price Index - INPC, related to the households with earnings between one and five minimum wages. The INPC rose 0.19% in January, below the rate of 1.22% recorded in December. This was also the lowest result for January since the beginning of the Real Plan. The cumulative index in the last 12 months stood at 4.30%. The rate had been 0.36% in January 2019.