Consumer prices in Brazil measured by the IPCA index rose 0.73 percent in December, taking the country’s final 2021 inflation rate to 10.06 percent. It is the biggest rate for a calendar year since 2015, but recent figures suggest inflation may now be easing — fueling hope that the country has already seen the peak in price bumps.
Three segments accounted for 79 percent of inflation last year: transportation (+21%), housing (+13%), and food products (7.9%). The devaluation of the Brazilian currency contributed to the rise in fuel prices, which are pegged to international oil fares, while droughts lowered hydroelectric reservoirs — making electricity bills more expensive — and disrupted crops, jacking up prices for food.
As we showed over the past weekend, a whopping 46 percent of Brazilian families spend at least half of their income on power bills. For 22 percent of the population, even basic food purchases had to be reduced so as to guarantee electricity in their homes, a number that jumps to 28 percent of families in Brazil’s highly unequal North region
When last year started, markets expected consumer prices to rise by 4.07 percent over the entire year of 2021. Forecasts continuously became bleaker, and the actual result even went beyond revised expectations — which projected an annual inflation rate of 10.01 percent. For 2022, markets expect inflation to hit 5.03 percent.