Pushed up by higher transportation costs, the IPCA-15 consumer price index — a sort of mid-month predictor of the official inflation rate — has risen 1.14 percent this month. It was the highest for a month of September since 1994, when the country had just launched a new currency, the Brazilian Real, to tame hyperinflation.
The IPCA-15 came higher than expected, as markets foresaw a 1.03-percent rise. Since the beginning of the year, the index is up 7.02 percent — and has topped the 10-percent mark over the 12-month period.
One sliver of good news is that many respected analysts expect September to represent a turning point for Brazil’s raging inflation. That is the case of Luciano Sobral, chief economist of investment management firm Neo Investimentos and a columnist for The Brazilian Report. He writes:
“We estimate that more than half of cumulative 2020-2021 inflation will be concentrated in just three groups of items: foodstuffs, electricity tariffs, and vehicular fuel, affected by climate, exchange rate pass-through, and global price.
In two other strong inflation decelerations of the past 20 years (between 2002 and 2003, and between 2015 and 2016), the “normalization” of those three groups clipped at least 3 percentage points from yearly inflation. This should be the case again in 2022, unless the disastrous combination of extremely dry weather and currency depreciation is repeated.”