Inflation in July was 0.38%, above the 0.21% rate recorded in June. The result was mainly driven by the price of gasoline, airline tickets and electricity. In 12 months, the Broad National Consumer Price Index (IPCA), considered the country’s official inflation rate, has accumulated 4.5%, at the upper limit of the Central Bank’s inflation target.
In June, the 12-month accumulated figure was 4.23%. The data was released this Friday (9) by the Brazilian Institute of Geography and Statistics (IBGE). In the first seven months of the year, the IPCA totaled 2.87%.
Seven of the nine groups of products and services surveyed by the IPCA showed price increases between June and July. The greatest inflationary pressure was in the transport group, which rose 1.82% and represented an impact of 0.37 percentage points (pp).
Within transport, the main increase came from gasoline, which rose 3.15% and individually represented the biggest impact among all the products assessed (0.16 pp).
This result was influenced by the adjustment of 7.12%, announced by Petrobras on July 8th.
Airline tickets became 19.39% more expensive in July, contributing 0.11 pp to the IPCA.
According to IPCA manager André Almeida, the school holidays in July led to an increase in airline ticket prices.
The housing group also put pressure on the IPCA, with an increase of 0.77%. The third largest individual influence on the acceleration of inflation in July was the residential electricity tariff – which is part of the housing group – and rose 1.93%, representing an impact of 0.08 pp. “The yellow tariff flag came into effect, which adds R$1.885 to every 100 kWh, causing price increases”, explains Almeida.
In August, the government announced the return of flag green, which represents less pressure on inflation in the current month.
Together, inflation for gasoline, airfare and electricity represents 0.35%, while the total IPCA for the month was 0.38%.
Food
The price of food and beverages fell by 1% in July and provided the greatest relief to inflation (-0.12 pp). Within the group, the item food at home showed a price decline (-1.51%) for the first time in nine months, when they accumulated an expansion of 6.87%.
“It is the biggest drop since August 2017, when the variation in food and beverages was -1.07%,” Almeida highlights. “What helps explain the drop in July is the greater supply of food,” he said, citing the intensification of harvests of tubers, roots and vegetables.
The main falls were in tomatoes (-31.24%), carrots (-27.43%), onions (-8.97%), potatoes (-7.48%) and fruits (-2.84%).
According to André Almeida, no pressure was identified due to problems in food production in Rio Grande do Sul, which was affected by floods that harmed the state’s agricultural activity in May.
The diffusion index, which measures the share of products that registered price increases, was 47%, that is, less than half of the 377 products and services surveyed by IBGE showed an increase. This is the lowest level since September 2023. In June, the diffusion index was 52%.
The explanation for the lower spread is the fall in food prices. Looking only at food items, the spread fell from 49% to 39% between June and July.
“In July, we can say that inflation was less widespread, however, with a greater impact on products with a large weight in the consumer basket, such as gasoline and electricity”, analyzes André Almeida.
The IPCA measures the cost of living for families with incomes between one and 40 minimum wages. Price data are collected in the metropolitan regions of Belém, Fortaleza, Recife, Salvador, Belo Horizonte, Vitória, Rio de Janeiro, São Paulo, Curitiba, Porto Alegre, as well as the Federal District and the cities of Goiânia, Campo Grande, Rio Branco, São Luís and Aracaju.
The inflation target set by the National Monetary Council (CMN) is 3%, with a tolerance of 1.5 percentage points either way, that is, a range of 1.5% to 4.5%.
INPC
The IBGE also released the National Consumer Price Index (INPC), which measures inflation for families with incomes of up to five minimum wages. In July, the INPC was 0.26%, stable compared to June (0.25%). The index has accumulated an increase of 2.95% in the year and 4.06% in 12 months.
*Article expanded at 10:45 am to add information.
