Inflation in Brazil rose 1.25% in October, the highest rate for this month since 2002, driven by fuels and food, the Brazilian Institute of Statistics (IBGE) reported on Wednesday.
The consumer price index accumulated a rise of 10.67% in twelve months and 8.24% so far this year.
The October indicator is above market expectations, that expected a rise of around 1% in October, according to estimates from consultants and financial institutions surveyed in the Central Bank’s Focus survey.
In addition, the October result marks a acceleration compared to September, when the price rise was 1.16%, with a cumulative increase above double digits for the first time in more than five years.
Inflation hits Brazil and more and more people are looking for food in the trash. Photo: AFP
Transportation and fuels
“The nine groups of products and services surveyed had increases in October,” IBGE said in its report.
“The greatest impact (on the general index) and the greatest variation (2.62%) came from Transport, which accelerated in relation to September (1.82%),” he said.
The second largest contribution to the advance in October is due to the increase in food and beverage prices (1.17%), detailed the statistical institute.
Inflation particularly affects the vulnerable population, who spend most of their income on food. In recent months, the images of people searching for food among the waste have multiplied in the country.
The government attributes the rise in prices to the increase in the prices of commodities and oil at the international level.
The increase in prices in Brazil. / AFP
This, specialists point out, is aggravated at the local level due to the rise in the dollar and some political initiatives, such as the one planned by the government to increase public spending.
Fuels, one of the main drivers of inflation for months, rose 3.21% in October, prompting increases in transport.
Gasoline (3.10%) marked the sixth consecutive increase and accumulated 42.72% in the last 12 months, according to IBGE. Also worth noting was the 5.77% increase in diesel prices, which impacts freight rates and makes goods more expensive.
Jair Bolsonaro, against Petrobras
President Jair Bolsonaro again blamed the state-owned Petrobras this week, which raised its prices due to the increases in prices in the global market, according to the oil company, which has become a regular target of the president’s attacks.
In the Central Bank’s Focus survey, inflation projected for this year reached 9.33%, and for 2022, 4.63%, already above the official goal of 3.5%.
Food prices skyrocket in Brazil, along with fuel and transportation prices. Photo: AFP
To contain inflation, the Committee of the Central Bank of Brazil (Copom) raised the benchmark interest rate by 1.5pp in its last October meeting, the highest advance since 2002, which brought the Selic to 7.75%.
In its decision, the committee considered that consumer inflation “has been more persistent than anticipated”, according to the minutes of the meeting.
The monetary authorities highlighted as an inflationary risk factor “the new extensions of fiscal policies in response to the pandemic”, which could increase demand and worsen the fiscal situation.
On Tuesday night, the Chamber of Deputies approved an initiative that – if approved by the Senate – will allow increase spending to reinforce social assistance at the level that Bolsonaro intends for 2022, the year in which he will seek re-election.
The Central Bank projected another 1.5pp adjustment in the last meeting of the year, on December 7 and 8.
But the entity’s director of Monetary Policy, Bruno Serra, recently said in an interview with a Japanese media that, if necessary, the monetary authority is willing to apply a greater increase.