MercoPress. South Atlantic News Agency

Brazil's CPI 0.42% up last month

Airline tickets fell in January, which drove inflation downward

According to Brazil's IBGE statistics bureau, inflation last month in South America's largest country reached 0.42% for an accumulated 4.51% year-on-year. These results were driven mainly by increases in the prices of food, Agencia Brasil explained. January's figures were lower than the 0.56% recorded by the Broad National Consumer Price Index (IPCA) in December.

In January, the food and beverage group, which holds the highest weight in the household consumption basket (21.12%), increased by 1.38%, which contributed 0.29 percentage points (p.p.) to the month's IPCA. It also marked the largest rise in food and beverage prices for the month since 2016 when it went up 2.28%.

“Traditionally, food prices increase during the summer months due to climatic factors that impact production, particularly for fresh foods like tubers, roots, vegetables, and fruits. This year, the situation was exacerbated by the presence of El Niño,” said research manager André Almeida.

He also noted that India, the world's largest rice producer, faced climatic challenges that affected production and reduced exports in the second half of 2023 which led to a decrease in supply and consequent higher prices.

Transport, which also carries considerable weight in the monthly household basket showed a 0.65% decrease in prices, mainly of airline tickets. After going up by 82.03% in September, October, November, and December, tickets fell by an average of 15.22% in January 2024. This was the item that had the largest negative impact on the overall IPCA.

The IPCA is considered the country's official inflation index, used by the Central Bank to monitor the official inflation target. For 2024, the target stands at 3%, with a tolerance of 1.5 p.p. above or below. The index calculates the cost of living for families earning between one and 40 minimum wages.

With January's results, the 12-month accumulated figure decreased from 4.62% to 4.51%, the fourth consecutive drop in this item.

(Source: Agencia Brasil)