On August 29th, the Central Bank of Brazil released a new perspective on the country’s official inflation. According to information from the Focus Bulletin, the projection measured by the Broad National Consumer Price Index (IPCA) fell; from 6.82% to 6.7% this year. This fact can guarantee a considerable drop in food prices. Want to know more? Then see below!
This is the 9th time that the projection for this index “falls”. The disclosure is made after a weekly survey and, in this way, brings expectations of the main economic indices. But the projection does not only consider the inflation rates for this year: the years 2023, 2024 and 2025 are also taken into account. For the next year, for example, the estimate is that inflation will reach 5.3%. Check out new details below.
Projection for 2023!
If all goes well, for 2023, the estimate is that inflation will reach 5.3%. For 2024 the index is even better, and should reach 3.41%; and, finally, in 2025 the expectation is that the result will be 3%. That is, the economic parameters consider a reduction in values for the next 03 years.
This means that, if maintained, the main products measured by the IPCA should fall. For example, food, beverages, electricity and even fuel. Therefore, the basic items that have increased in value in recent months and that had caused damage to the budget of families should return to a lower price level.
However, from July onwards, the indices began to improve and are moving in the opposite direction to what had been common. That is, instead of the country rising in inflation, deflation was registered, which is when prices fall. In June, after a rise of 0.67% in the IPCA, the following month showed a fall of 0.68%. For August there was a new fall, or deflation, this time of 0.73%.
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Will food prices really fall?
As for 2023 the expectation is that inflation will fall to 5.3%, compared to 6.7% that the country is experiencing at the moment, there is hope that products will fall again. However, the deflations of the months of July and August were driven by the fall of products such as Gasoline and Electricity, while foodstuffs continued to rise, and rising.
One of the explanations for this is that the state ICMS tax applied to fuels and electricity was reduced. So, by federal order, it had to be set between 17% and 18%. As a result, these same products ended up registering a drop in prices for the final consumer.
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