IPCA registers 0.23% increase in May, driven by health plans and below forecasts
The result demonstrates a considerable deceleration compared to the previous month, in which the inflation rate increased by 0.61%. In the 12-month period up to the previous month, Brazil registered an accumulated inflation rate of 3.94%.
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The Brazilian Institute of Geography and Statistics (IBGE) announced this Wednesday (07) that the Broad Consumer Price Index (IPCA), which is recognized as the official measure of inflation in Brazil, recorded an increase of 0.23% in May compared to the previous month. In the accumulated 12 months so far, the IPCA registered an increase of 3.94%.
The current result shows a significant reduction of 0.38 percentage points in relation to April, when inflation showed a more expressive increase, with a monthly rate of 0.61% and an annual rate of 4.18%. These numbers were considerably lower than financial market projections, which predicted an increase of just 0.33% compared to the previous month and 4.05% compared to the previous year.
May high
The rise recorded in May was driven by the Health and personal care sector, with emphasis on health plans, which increased by 1.20% during the month. On the other hand, the reduction in prices in the Transport and Home Goods sectors, together with a slowdown in items related to food at home, were the main factors responsible for limiting a more significant increase in the IPCA inflation index.
Second Carla Argenta, Chief Economist at CM Capital, it is more important to analyze the items that had the biggest increases and decreases in the month than simply to observe the slowdown itself. The specialist explains that, in the last month, administered prices were the main reason for the increases, referring to products whose variations are less influenced by supply and demand and have their prices determined by the government or by other entities, such as health plans. . On the other hand, market prices, which are more sensitive to the law of supply and demand, were the ones that showed the most significant decelerations, as in the case of home goods.
What it means
According to Carla, in practice, the interest rate hike policy implemented by the Central Bank of Brazil (BC) is having an impact on the country's inflation, controlling the increase in free prices. Based on data observed in May, the accumulated inflation in the last 12 months was 3.94%, approaching the target established by BC for 2023. The target is 3.25%, with a variation margin between 1.50% and 4.50% to be considered officially fulfilled. However, in the year to date, the index already shows an increase of 2.95%.
Breakdown of inflation by groups
Food and beverages: 0.16%
Housing: 0.67%
Home items: -0.23%
Clothing: +0.47%
Transport: -0.57%
Health and personal care: +0.93%
Personal expenses: +0.64%
Education: +0.05%
Communication: +0.21%
The biggest increases were registered in the sectors of health, housing and personal expenses
According to IBGE, the sectors of Health and Personal Care, Housing and Personal Expenses were responsible for the greatest impact positively in the IPCA. In the area of health, in addition to the outstanding influence of health plans, which have undergone significant readjustments in recent months, the institute also highlights the 1.13% increase in personal hygiene items, with emphasis on perfumes, which recorded an increase in 3.56%, and pharmaceutical products, which increased by 0.89%.
The economist also points out that the increase in the prices of perfumes and personal hygiene items in general can be considered an "inflationary shock", that is, an extraordinary impact, which in this specific case was boosted by the Mother's Day celebrations. Therefore, prices are expected to normalize next month. In the Housing sector, essential accounts were the main drivers of the increase in inflation: water and sewage tariffs increased in several states after adjustments, resulting in a cumulative increase of 2.67% across the country, as well as residential electricity , which recorded an increase of 0.91%.
In the Personal Expenses segment, inflation was driven by a 15% increase in the value of bets, resulting in a 12.18% growth in the entire sub-group of gambling activities. In addition, spending on food for animals, domestic servants, cinema, theater and concerts also increased.
