Brazil’s broad consumer price index, the IPCA, rose 0.14 percent in October, a sharp deceleration from 0.82 percent in September and below the 0.25 percent increase economists polled by Reuters had expected. The 12-month rate edged up to 4.63 percent from 4.58 percent in September, against a poll expectation of 4.73 percent, and prices were up 4.10 percent in the first ten months of the year, IBGE said.
The slowdown was led by two groups. Housing fell 0.51 percent as residential electricity swung from a 7.98 percent increase in September to a 1.92 percent fall in October, when the tariff flag moved from yellow to green and the surcharge on bills ended; IBGE’s IPCA manager Fernando Gonçalves identified electricity as the month’s largest single negative contribution, at minus 0.08 percentage points. Transportation fell 0.59 percent as airfares dropped 9.21 percent after rising 9.66 percent in September and gasoline prices fell 0.56 percent.
Food moved the other way. Food and beverages rose 1.04 percent, the month’s largest increase and largest positive contribution at 0.22 percentage points, with tomatoes up 19.57 percent, onions up 11.29 percent, rice up 4.81 percent and meat up 2.27 percent, which IBGE attributed in part to heavy rainfall constraining supply and higher diesel costs in the production chain. The national consumer price index INPC rose 0.22 percent in October, for a 12-month rate of 4.49 percent.
The central bank targets 3 percent inflation with a tolerance band of 1.5 percentage points either side, so the 4.63 percent 12-month rate sits just above the ceiling. Reuters reported policymakers vowing to keep using high interest rates to rein in persistent inflation; the softer monthly composition, concentrated in electricity and airfares rather than in services, is not by itself a case for easing. The next IPCA release, for November, is due December 11.