Inflation in Brazil Slows for all Social Groups, Says Research

By Richard Mann

RIO DE JANEIRO, BRAZIL – Inflation has slowed for all social groups, especially for the lowest income bracket, the Institute of Applied Economic Research (IPEA) reported yesterday, June 14th. According to the Ipea Indicator of Inflation by Income Range, in May there was a slowdown for the second consecutive month.

According to the IPEA, deflation in food prices benefited lower-income families, who experienced inflation of 0.10 percent, while wealthier families experienced inflation of 0.18 percent. In the 12-month aggregate from June 2018 to May 2019, inflation for poorer families stood at 5.05 percent, higher than the 4.4 percent rate for families with higher purchasing power.

The research shows that, of the sixteen subgroups that make up the household food segment, ten showed deflation in May. The items showing the most significant price drops were tubers (-.3 percent), vegetables (-4.6 percent), cereals (-5.0 percent), and fruits (-2.9 percent). These products weigh more heavily in the food basket of poorer households. Therefore, the drop in prices helped to partially offset the effects of high electricity (2.2 percent), bottled gas (1.4 percent), and pharmaceutical products (0.82 percent), according to IPEA.

The 2.6 percent hike impacted inflation among wealthier families in gasoline prices and the increase in health plans (0.80 percent) and medical care (0.56 percent). Food contributed to the slowdown, albeit at a slower pace.

Foodstuffs accounted for the reduction in the inflation rate of all income classes, according to IPEA, compared to May of last year. In the case of lower-income families, there was a 0.31 percentage point drop, and inflation fell from 0.41 percent to 0.10 percent. For the richest, the decline was 0.20 percentage points: the rate fell from 0.38 percent in May 2018 to 0.18 percent in May 2019.

The Income Range Inflation IPEA Indicator is calculated monthly, using variations in the prices of goods and services provided by the National Consumer Price Index System (SNIPC) of the Brazilian Institute of Geography and Statistics (IBGE).

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