The reduction in the electricity bill pulled official inflation down and caused the Broad National Consumer Price Index (IPCA) to close October at 0.09%, the lowest for the month since 1998. In September, the index had marked 0.48%. In October 2024, the variation had been 0.56%.
With this result, the IPCA accumulated in 12 months is 4.68%, a reduction compared to the 5.17% for the 12 months ending in September. It is the first time in eight months that the level is below 5%. However, it is still above the government’s target of 3%, with a tolerance of 1.5 percentage points more or less, that is, a maximum of 4.5%.
The data was released this Tuesday (11) by Brazilian Institute of Geography and Statistics (IBGE).
Electricity bill
Residential electricity fell 2.39% in the month, representing an impact of -0.1 percentage point on the IPCA.
The explanation lies in the migration from the red tariff flag level 2 to 1. In level 2, there is an additional charge of R$7.87 on the electricity bill for every 100 kilowatts (Kwh) consumed. At level 1, in force in October, the extra is R$4.46.
The extra charge is determined by the National Electric Energy Agency (Aneel) to pay for thermoelectric plants in times of low hydroelectric reservoirs. The additional amount is necessary, as the energy generated by thermoelectric plants is more expensive than hydroelectric plants.
According to the research manager, Fernando Gonçalves, if there was no relief on the electricity bill, October’s IPCA would be 0.20%.
Food
After falling for four consecutive months, the food and beverage group, which has the greatest weight in families’ monthly costs, remained stable, changing 0.01%.
This change in food and beverages is the lowest for the month of October since 2017 (-0.05%).
The IBGE highlighted the declines in rice (-2.49%) and long-life milk (-1.88%). In the opposite direction, potatoes rose 8.56% and soybean oil rose 4.64%.
Check how the prices of certain groups of products and services behaved:
– Food and drinks: 0.01% (0.00 pp)
– Housing: -0.30% (-0.05 pp)
– Household items: -0.34% (-0.01 pp)
– Clothing: 0.51% (0.02 pp)
– Transport: 0.11% (0.02 pp)
– Health and personal care: 0.41% (0.06 pp)
– Personal expenses: 0.45% (0.05 pp)
– Education: 0.06% (0.00 pp)
– Communication: -0.16% (0.00 pp)
Of all 377 products and services surveyed, the biggest increases were in residential rent (0.93%) and air tickets (4.48%). Both individually accounted for 0.03 pp of the IPCA.
Above target
The 12-month IPCA is the 13th in a row outside the government’s tolerance limit. This is one of the main reasons for the Central Bank to maintain the interest rate basic interest rate of the economythe Selic, at 15% per year, the highest level since July 2006 (15.25%).
High interest rates make credit more expensive and discourage investment and consumption, thus acting as a brake on the economy, reducing demand for products and services and, consequently, cooling inflation.
The IBGE disaggregates the IPCA into two groups, services, which includes prices that are most influenced by the heating or cooling of the economy – that is, more susceptible to the Selic rate – and monitored prices, which are usually controlled by contracts, and fuels.
Services inflation marked 0.41% in October and 6.20% in 12 months. Those monitored fell 0.16% in the month and rose 4.20% in 12 months.
THE Focus newsletter This Monday (10), a survey by the Central Bank (BC) with financial market agents, estimates that official inflation at the end of 2025 will be 4.55%. Selic should end the year at 15%, according to Focus.
The index
The IPCA calculates the cost of living for families with income between one and 40 minimum wages. In total, prices of 377 sub-items (products and services) are collected.
Price collection is carried out in ten metropolitan regions – Belém, Fortaleza, Recife, Salvador, Belo Horizonte, Vitória, Rio de Janeiro, São Paulo, Curitiba, Porto Alegre – in addition to Brasília and in the capitals Goiânia, Campo Grande, Rio Branco, São Luís and Aracaju.
