By Jay Forte, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The National Extended Consumer Price Index (IPCA), the country’s official inflation, closed in 2017 with a cumulative high of 2.95 percent, a result of 3.34 percentage points lower than the 6.29 percent of 2016. This is the lowest since the rate of 1998 when it was 1.65 percent.

Food and Beverage sector contributed most to contain inflation, Rio de Janeiro, Brazil, Brazil News
Of the nine groups that make up the IPCA, the Food and Beverage sector contributed most to contain inflation in 2017, photo by Tânia Rêgo/Agência Brasil.

Also reported today, inflation as measured by the National Consumer Price Index (INPC), ended 2017 with a cumulative high of 2.07 percent, a result much lower than the 6.58 percent of 2016. It is the lowest rate since the implementation of the Plano Real (Real Plan) in 1994.

With closing 2017 at 2.07 percent, the INPC, which measures the variation of households with incomes between 1 and 5 salaries, ends the year with a cumulative variation of 0.88 percentage points, below the annual high of the Broad Consumer Price Index (IPCA).

The data was released today (January 10th), in Rio de Janeiro, by the Brazilian Institute of Geography and Statistics (IBGE) and indicates that in December, the IPCA closed at 0.44 percent, with 0.16 percentage points above the result of November (0.28 percent). This was the highest monthly change in 2017.

The IPCA inflation of 2017 of 2.95 percent was below the lower target set by the Monetary Policy Committee (COPOM), which was 4.5 percent (with a tolerance of 1.5 percentage points for more or less). For 2017, the government had set an inflation target of 4.5 percent, with a possibility of upward or downward variation of 1.5 percent, or between 3 and 6 percent.

Of the nine groups that make up the IPCA, the Food and Beverage sector contributed most to contain inflation. Responsible for about 25 percent of household expenses, the group accounted for a cumulative decline (deflation) of 1.87 percent.

The result was a reduction of 4.85 percent in the price of food consumed at home, especially fruit (-16.52 percent), which had the greatest negative impact (-0.19 percentage point).

According to the manager of IBGE’s National System of Consumer Price Indexes, Fernando Gonçalves, food deflation was a consequence of agricultural production, which had a crop about thirty percent higher than that of 2016.

“This situation led the consumer to pay less (-1.87 percent) than the previous year. It is the first time the group has been deflating since the implementation of the Plano Real,” he said.

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