Brazil’s Inflation in July Eases as Strike Effects Decrease

By Lise Alves, Senior Contributing Reporter

RIO DE JANEIRO, BRAZIL – July’s IPCA (Consumer Price Index) registered an inflation rate of 0.33 percent in July, a steep decrease from the 1.26 percent rate registered in June, according to the IBGE (Brazil’s Statistics and Geography Institute). The plunge, say analysts is due to the artificial increase of inflation in June, due to the eleven-day truck drivers’ strike in May.

“In August we can have a better picture of the impacts of the truckers’ strike, but apparently the reflexes were punctual in June,” said IBGE IPCA manager, Fernando Gonçalves.

With the latest result, the IPCA now registers an inflation rate of 2.94 percent in the first seven months of the year and 4.48 percent in the last twelve months.

The segment of food and beverages fell by 0.12 percent in July in contrast with an increase of 2.03 percent in June, making it one of the main groups responsible for the decline of inflation from June to July.

Among the food products registering the highest decreases were onion (-33.5 percent), potato (-28.14 percent), tomato (-27.65 percent), fruits (-5.55% percent) and meats (-1.27 percent).

Transport also contributed to the decline of inflation in July. Despite continuing to register an inflation of 0.49 percent, the rate was much lower than that seen in June (1.58 percent).

On the negative side, the cost of electricity rose by 5.33 percent in July and was the main segment contributing to the index, responding alone by 0.20 percentage point of the 0.33 percent increase of the IPCA in July.

Since January electricity prices have accumulated an increase of 13.78 percent and in the twelve months ending in July, the increase of the segment has been of 18.02 percent.