Despite the pressure from increases in the prices of food, health plans and medicines, the preview of official inflation in the country slows down to 0.21% in April

The Broad National Consumer Price Index 15 (IPCA-15) slowed from a high of 0.36% in March to an increase of 0.21% this month, reported this Friday, 26th, the Brazilian Institute of Geography and Statistics (IBGE). The number was lower than expected by the market, which projected 0.29%; in 12 months, the index was 3.77%.

The rate, the lowest for April since 2020, fell short of the estimates of most financial market analysts, who expected a median increase of 0.29%. The result caused inflation accumulated over 12 months to cool from 4.14% in March to 3.77% in April, the mildest since July 2023.

Despite the performance considered benign, there is still no consensus in bets on the magnitude of the cut in the basic interest rate, the Selic, at the May meeting of the Central Bank’s Monetary Policy Committee. The chief economist of brokerage Monte Bravo, Luciano Costa, cites the increase in uncertainty in the global scenario and fiscal risks, in addition to fears about inflation in services, for a milder cut, of 0.25 percentage points, next day 8.

Uncertainties

“Reducing the pace of cuts to 25 basis points (0.25 percentage points) will allow the Central Bank to assess the evolution of uncertainties over the next few months,” stated Costa, adding that such a strategy should allow the reduction cycle to continue. interest, taking the Selic rate from the current 10.75% per year to 9.50%.

For the chief economist at resource manager B. Side Investimentos, Helena Veronese, the April IPCA-15 result itself suggests a situation of less pressured inflation, allowing for a new cut of 0.50 percentage points in the Selic.

“With the IPCA-15 it is possible to think about a 0.50 point reduction in the Selic, but what will define the size of the interest in the end are the fiscal and the external scenario”, added Veronese, adding that the fiscal issue remains in the monetary authority radar.

Foods

In April, 0.61% higher spending on food and 0.78% higher spending on health expenses boosted the month’s inflation preview. Food prices reduced their rate of increase compared to March, but the increase recorded in April still accounted for almost 60% of all inflation measured by the IPCA-15. The main villain was tomatoes, with a rise of 17.87%, alone responsible for around 25% of April’s inflation.

There was also pressure from pharmaceutical products, which became 1.36% more expensive, after the authorization of an increase of up to 4.50% in drug prices from March 31, and from health insurance, which increased by 0.77%. .

On the other hand, families spent 0.49% less on transport. Airline tickets were 12.20% cheaper. There were also reductions in gasoline (-0.11%), vehicle gas (-0.97%), diesel oil (-0.43%) and urban buses (-0.05%).

LCA Consultores predicts that April’s closed IPCA will accelerate to 0.36%, with more significant increases in fresh food, medicines, household items and clothing items. The IPCA-15 would repeat the same increase of 0.36% in May, cooling down to a rise of 0.15% in June. Economist Fábio Romão, from LCA, expects that food prices for consumption at home will enter deflation from May onwards, with this seasonal trend intensifying in June.

Tolerance

At the end of 2024, the LCA estimates that the IPCA will remain at 3.7%, therefore, within the tolerance ceiling (4.50%) of the inflation target pursued by the Central Bank in 2024, which is 3.0% . Tendências Consultoria Integrada projects an increase of 3.8% in this year’s IPCA. The inflationary situation remains benign, but there are risks ahead, warns Matheus Ferreira, an analyst at Tendências.

“Signs of further tightening in the labor market, ongoing demand stimulus and unanchored inflation expectations still represent risks to inflationary dynamics,” wrote Ferreira.