Inflation falls to lowest level since 1994

The prices of essential products to Brazilian families became cheaper in November. According to the Brazilian Institute of Geography and Statistics (IBGE), inflation stood at 0.21% – the best result for the month since the beginning of the Real Economic Plan.

The main favourable influences came from price declines in housing, clothing, transportation, healthcare, personal care and communication. The numbers published are part of the Broad Consumer Price Index (IPCA), considered the country's official inflation index.

With the November results, inflation in last-twelve-month terms decelerated from 4.56% to 4.05% between November 2018 and November 2017. If the indicator remains at around a similar level in December, Brazil will have met the inflation target for the third consecutive year. The Central Bank has as mandate to pursue an inflation target regime centred around 4.5%.

Cheaper products

According to the IBGE, electricity has the most favourable impact on the index, falling by 4.04%. “We had the change of the general rate bands. It was at level 2 of the it is at the yellow band. This was the main factor,” explained Pedro Costa, an analyst of the price index.

Fuels also played a major role for the general inflation drop: gasoline prices retreated by 3.07%, ethanol by 0.52% and diesel oil 0.58%. “Petrobras has reduced amounts charged in the refinery by 24%, and a portion of this was passed on to the end consumer,” said Costa.

What is the IPCA?

The IPCA index is published by the IBGE (Brazilian Institute of Geography and Statistics). Initially created in 1980, it shows the average price changes for a basket of specific products. The item list is focused on the needs of families with income of one to 40 minimum wages per month.

Prices are surveyed in 10 metropolitan regions of the country, in addition to the cities of Goiânia (GO), Campo Grande (MS), Rio Branco (AC), São Luís (MA), Aracaju (SE), and Brasília (DF).