Brazil’s mid-month inflation index for February came in below market expectations for a second month in a row, at 0.78 percent.
The IPCA-15 index, a reliable bellwether for how inflation will behave, was 0.47 percentage points higher than in January, but largely within market estimates. The median projection of consultancies and financial institutions polled by Valor Data expected an increase of 0.81 percent for February.
With the return to lessons for the new school year, February inflation readings are typically affected most by education-related prices — and this year is no different. Increases in tuition fees led to a 5.07 percent increase overall in the index’s Education group, and contributed 0.3 percentage points of the 0.78 percent monthly increase.
As we showed in today’s Brazil Daily newsletter, enrollment in Brazilian private schools is on the rise again after the Covid pandemic, and there are more Brazilian students in private education facilities now than ever recorded before.
This is despite an average 10.9 percent increase in tuition fees last year, well above inflation. Consulting firm Rabbit Group forecasts fees to go up by 9.4 percent on average this year.
Inflation results for January (not mid-month readings) had been higher than expected, although the headline figure was in decline. Food costs have been on the rise for three straight months, and the 0.97 percent hike recorded by February’s mid-month reading suggests that streak will hit four.
Food prices are crucial to inflation in Brazil, as they weigh disproportionately more on the budgets of poorer families.
Extreme heat and higher-than-usual rainfall hurt agricultural production in several regions of the country, with these weather disturbances being linked to the El Niño phenomenon — the effects of which should begin to fade as we enter March and April.
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