Consumer prices shot up 0.53 percent in June, taking 12-month inflation to 8.35 percent — well above the 5.25-percent target set by the government. The index is still largely driven by food prices, which have taken an excessive toll on low-income households.
A new report by the Institute of Applied Economic Research (Ipea) shows just how heavily inflation has weighed on the poor. While prices increased 0.23 percent in June for high-income consumers, the rise was 0.45 percent for very low-income households.
Amid a water crisis, the government is now relying more on thermal power plants for electricity generation, which are more expensive to operate than hydroelectric stations. As a result utility bills have also shot up.
Economists surveyed by the Central Bank increased expectations for 2021 inflation from 6.07 to 6.11 percent.