Brazil’s IPCA-15 inflation tops projections, hits 10% in 12 months; interest rate futures rise
RIO DE JANEIRO, BRAZIL – Brazil’s Broad National Consumer Price Index (IPCA-15) has reached double-digit 12-month highs for the first time since the beginning of 2016 after Brazil’s official inflation forecast for September was higher than expected and at the highest level for the month in 27 years.
Amid intense monetary tightening amid concerns about inflation, the IPCA-15 rose 1.14% in September, after a high of 0.89% in August. As a reaction in the market, the DIs, interest rate futures contracts, rose in all scenarios starting in January 2022.
This was the highest monthly result for the index since February 2016 (1.42%) and the highest rate for September since 1994, when the Real Plan was introduced.
The accumulated rate in 12 months reached 10.05%, reaching double digits for the first time since the 10.84% recorded in February 2016, according to data from the Brazilian Institute of Geography and Statistics (IBGE) released on Friday, September 24.
The official inflation target is 3.75%, with a margin of 1.5 percentage points.
The recent inflationary pressure led the Central Bank to raise the benchmark interest rate Selic this week to 6.25% per year, the second consecutive increase of 1 percentage point. The median market expectation is for the Selic to reach 8.25% by the end of 2021.
“Certainly (this inflation) will pressure the Central Bank until the next Copom (in early November). The market will ask for a hike of more than one percentage point,” said Gustavo Cruz, strategist at RB Investimentos.
The results were above expectations in a Reuters poll, in which analysts pointed to IPCA-15 advances of 1.02% and 9.93%, respectively, in monthly and annual comparisons.
Most significant hikes: fuels and energy
According to IBGE data, the biggest villains of the IPCA-15 in September were once again gasoline and electricity. Fuels rose 3.0% in September, following a 2.02% hike a month earlier. Gasoline alone spiked 2.85% and has accumulated a 39.05% advance over the last 12 months. Ethanol rose 4.55%, vehicular gas 2.04%, and diesel 1.63% of the other fuels.
This led the Transport group to climb 2.22% in September, double the 1.11% in August. The group also witnessed a 28.76% advance in airfares after a 10.90% drop in August.
Live Market IntelligenceBrazil — Live Market Board
Rio Times · Live Market Intelligence
Brazil — Live Market Board
-0.10%
166,934.20
-0.10%
64,397.45
-0.66%
11,042.67
+0.39%
2,947,349
-1.77%
2,452.46
+0.84%
58,104.31
+0.40%
| Instrument | Last | Change | YoY | Prev. | High | Low | Volume |
|---|---|---|---|---|---|---|---|
| IBOV | 166,934.20 | -0.10% | +21.85% | 167,100.95 | 168,310 | 167,142 | — |
| USD/BRL | 5.16 | +0.01% | -5.13% | 5.16 | 5.18 | 5.14 | — |
| SELIC | 14.00% | — | — | — | — | — | |
| PETR4 | 41.64 | -0.05% | +35.19% | 41.66 | 41.97 | 41.15 | 41,499,400 |
| VALE3 | 72.97 | +0.83% | +30.75% | 72.37 | 73.54 | 72.66 | 17,658,000 |
| ITUB4 | 38.60 | -1.03% | +4.57% | 39.00 | 39.34 | 38.39 | 29,487,800 |
| BBDC4 | 16.85 | +0.36% | +3.50% | 16.79 | 16.90 | 16.67 | 19,416,900 |
| BBAS3 | 19.37 | +0.47% | +0.73% | 19.28 | 19.44 | 19.16 | 11,069,200 |
| B3SA3 | 14.26 | -0.21% | +12.73% | 14.29 | 14.47 | 14.11 | 33,037,800 |
| ABEV3 | 14.89 | -0.80% | +21.91% | 15.01 | 15.07 | 14.81 | 16,453,100 |
| WEGE3 | 47.59 | +0.49% | +29.99% | 47.36 | 48.08 | 47.36 | 3,364,600 |
| PRIO3 | 59.14 | -0.19% | +50.67% | 59.25 | 59.81 | 58.74 | 3,325,600 |
| SUZB3 | 41.33 | +2.35% | -23.55% | 40.38 | 41.48 | 40.35 | 3,914,900 |
| RENT3 | 34.68 | -0.09% | +0.84% | 34.71 | 34.96 | 34.35 | 7,979,100 |
| AZZA3 | 15.89 | -2.63% | -53.76% | 16.32 | 16.42 | 15.82 | 1,330,300 |
| CSNA3 | 4.30 | +0.47% | -42.65% | 4.28 | 4.41 | 4.26 | 10,076,100 |
| GGBR4 | 24.69 | +2.19% | +51.38% | 24.16 | 24.85 | 24.18 | 7,047,600 |
| ENEV3 | 24.21 | -1.38% | +70.49% | 24.55 | 24.64 | 23.99 | 9,297,000 |
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